Vistry Group PLC (LSE:VTY) shares rose 2.8% to 645.8p after the housebuilder reaffirmed its full-year outlook, saying it still expects a year-on-year rise in profits despite a tough housing market.
Ahead of the third-quarter trading update, said broker Panmure Liberum, "many commentators were assuming that Vistry would disappoint", following half-year results in September that did just that.
But the company confirmed that demand from housing associations and local authorities has strengthened as the year progresses.
The Pan-Libs analysts believe this reflects a range of factors, including growing HA operational surpluses.
Vistry revealed that the previously announced £50 million grant award from Homes England is already being deployed and will help deliver activity for the Partnerships arm in Q4.
A small improvement in open market housebuilding activity "is not going to move the dial" but is encouraging and a positive surprise, the Pan-Libs team said.
Analysts at Stifel also viewed the update as reassuring, given that the target implies around 30% growth in second-half pre-tax profit, a goal some had questioned amid sluggish private sales.
Net debt stood at £295 million at the end of June, up from £181 million at the end of last year, but the company reiterated its aim to bring that figure down by December.
The Stifel team said that, as the most indebted of the major listed housebuilders, Vistry would likely be rewarded by investors if it delivers on that, with the capital-light Partnerships model expected to help generate stronger cash flow and higher returns.
With the shares trading at around a 20% discount to fair value against the sector, this "is becoming harder to argue against while confidence in execution is rebuilding", was the Stifel conclusion, maintaining its 'hold' rating.