Persimmon PLC (LSE:PSN) has been downgraded to 'hold' from 'buy' by Deutsche Bank, despite delivering a stronger-than-expected performance in 2025, as the broker said much of the good news is now reflected in the valuation.
Deutsche Bank said Persimmon’s full-year pre-tax profit is guided about 5% ahead of its forecasts, driven mainly by higher volumes rather than margins, which came in towards the lower end of guidance.
The bank described the performance as solid but noted that sales rates were low in the fourth quarter.
Looking ahead, management expects volumes in 2026 to be broadly flat year on year, reflecting a back-end-weighted outlet opening programme and market conditions similar to 2025.
That implies profit growth of around 5%, which Deutsche views as prudent and achievable rather than ambitious.
The broker said Persimmon deserves a premium rating versus peers, citing higher returns on tangible equity and lower exposure to fire-safety remediation costs.
However, with the shares having risen sharply over the past year and now trading at more than 1.2 times forecast net tangible assets, Deutsche concluded that this premium is already priced in, prompting the downgrade to Hold while leaving its target price unchanged.