20% NTAV growth..."> Bellway PLC upgraded to 'buy'; Deutsche Bank says fears over the London effect are overdone 20% NTAV growth pa to 2020E, we see the current share price as a good entry point into Bellway," said Deutsche Bank" /> 20% NTAV growth pa to 2020E, we see the current share price as a good entry point into Bellway," said Deutsche Bank"/>
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Bellway upgraded to 'buy'; Deutsche Bank says fears over the London effect are overdone

"With a strong reputation (repeated upgrades, conservative asset allocation allowing dividend payments every year since listing) and >20% NTAV growth pa to 2020E, we see the current share price as a good entry point into Bellway," said Deutsche Bank
Man constructing a house
A slowdown in house prices has put pressure on Bellway's margins

The current share price of house-builder Bellway PLC (LON:BWY) is a good entry point for investors, suggests Deutsche Bank.

Since the start of 2018, the stock has underperformed, both in absolute terms – the stock is down 11% over the period – and relative to the sector, and Deutsche Bank (DB) thinks this is because of a “perceived read-across from peer issues on London/South, plus a change in management”.

READ: Bellway expects record annual earnings but warns on house price growth slowdown

DB would argue that the change in chief executive was on the cards and that there is no change in the credibility of the management team.

Meanwhile, it thinks concerns about the house-builder’s exposure to the cooling housing market in London and the south-east are overdone.

“While group revenue from London is ahead of peers, Bellway’s private average selling price remains below the sector average and its strong and increasing focus on build efficiencies should provide support to margins,” DB predicted.

The bank has upgraded its recommendation from ‘hold’ to ‘buy’ and bumped up the price target from 3,716p to 3,745p.

The bank also amended its price targets for a number of stocks in the house-building sector:

Bellway’s shares currently trade at 2,941p, up 51p on the day.

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