Vistry Group PLC's (LSE:VTY) focus on affordable and build-to-rent housing may finally be set to pay off.
Analysts at Panmure Liberum have reinitiated coverage of the UK’s largest housebuilder with a “buy” rating and a 725p target price, arguing that investors are overlooking the company’s position at the heart of the government’s housing plans.
The broker says Vistry’s asset-light partnership model, which concentrates on large-scale affordable and rental housing rather than traditional private sales, should deliver strong free cash flow and high returns as volumes pick up.
Management is targeting returns on capital of 40%, annual revenue growth of 5–8% and an operating margin of 12%.
At present, Vistry delivers around 14.5% of all affordable homes built in the UK, giving it a dominant position in the sector.
Panmure expects the company to be a major beneficiary of the new £39 billion Affordable Homes Programme, which runs from 2026 to 2036 and is designed to lift completions by more than 50% over the next decade.
The model may produce slimmer margins than conventional housebuilders, but it allows sites to be developed faster and with far lower working capital needs.
As a result, the broker sees cash generation rising sharply, with free cash flow averaging more than £400 million a year in the late 2020s.
The shares, at 604p, trade at about 0.9 times forecast tangible net asset value, a discount to peers. Panmure Liberum’s 725p target assumes that multiple rises modestly to 1.05 times as returns improve.
Looking further ahead, it sees potential for the shares to approach 1990p by 2030 if Vistry hits its medium-term targets.
Recent investor nerves around planning reform and sector sentiment have weighed on the stock, but the broker thinks the picture will improve as funding allocations under the Affordable Homes Programme become clearer.
For now, Vistry’s blend of government-backed demand and capital discipline makes it a different kind of housebuilder... and one positioned to benefit from the next housing cycle.