Persimmon PLC (LSE:PSN) was graced with an upgrade by Jefferies on Tuesday, as analysts saw potential upside on wider optimism of a recovery within the housing market.
Significant cuts to mortgage rates this year and growing speculation of support for first time buyers in the upcoming spring budget are driving optimism, Jefferies said in a note.
“We believe [these] will drive anticipation of meaningful upside potential to forecasts and a further rally in the stocks,” analysts continued.
Housebuilders have collectively climbed by 30% since October, the bank added, with upcoming election manifesto promises said to be key in driving confidence for the sector.
“While our top picks remain Taylor Wimpey PLC (LSE:TW.) and Bellway PLC (LSE:BWY), we also add Persimmon to our buy list,” Jefferies said.
Persimmon offers “scope for a meaningful change in sentiment towards the group given its position to leverage into an improving market,” the bank added.
Rivals Crest Nicholson PLC (LSE:CRST) faced a downgrade meanwhile, after the builder reported on Monday that higher-than-expected costs would hit full-year earnings.
Jefferies also said it remained cautious on Barratt Developments PLC (LSE:BDEV) due to constraints on opening new sites in the new term.
“With new 'oven ready' land taking at least 18 to 24 months before they deliver homes, key to leveraging into the anticipated housing market recovery in 2024 and 2025 will be the rate of outlet openings that can be achieved,” Jefferies said.
Persimmon climbed 1.1% to 1,466.50p.