Stifel has backed Crest Nicholson PLC (LSE:CRST) to rebound strongly, arguing that a credible new strategy could unlock a 50% jump in the share price.
The housebuilder’s recent capital markets (CMD) day laid out a plan to fix past mistakes, reset its financial targets and get returns back in line with the rest of the industry.
The broker said the CMD presentation addressed long-standing concerns head-on and offered practical solutions, including sharper cost control and a more disciplined approach to land buying.
Stifel was especially upbeat about the company’s ability to release capital from its land and work-in-progress holdings, suggesting it could free up over £300 million - well above the company’s own target of £150 million to £200 million.
Crest Nicholson shares have been trading near record lows, and Stifel thinks that undervalues the business.
At just 0.59 times book value, the stock lags well behind the sector average of 0.92 times. If that gap closes, the broker says there is potential for a significant re-rating.
Stifel has raised its price target to 220p from 180p and maintained its 'buy' recommendation.
In afternoon trading, the shares were down 1.6% at 164.4p.