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Countryside Properties weak as JPMorgan cuts to ‘underweight’ on valuation grounds in upbeat housebuilders review

The US bank adjusted target prices for a number of other sector players, cutting those for Taylor Wimpey, Crest Nicholson PLC, and Bovis Homes, but raising the target for Redrow
Persimmon home
Its analysts named FTSE 100-listed Persimmon as their top sector pick for 2019, with almost 50% upside potential to their unchanged price target

Countryside Properties PLC (LON:CSP) shares were weak on Monday as JPMorgan Cazenove downgraded its rating for the housebuilder to ‘underweight’ from ‘neutral’ following recent relative strength in an upbeat sector review.

The US bank left its target price for Countryside Properties unchanged at 375p with the FTSE 250-listed shares currently trading at 314.20p, down 4.8% on Friday’s close, having gained nearly 10% in the year-to-date up to that point.

READ: Taylor Wimpey sees 2019 volumes similar to 2018 levels given current market conditions

In the housebuilding sector note to clients, JPMorgan’s analysts said: “Trends in UK new build remained robust through 2018 and nothing we see in the lead-indicators suggests that this is obviously about to materially change.”

They added: “Following a period of mid-single digit consensus wholesale downgrades into the end of 2018 that we view as largely unfounded, we see scope for both a re-rating and consensus upgrades through H1.”

The analysts adjusted target prices for a number of other sector players, cutting those for Taylor Wimpey PLC (LON:TW.), Crest Nicholson PLC (LON:CRST), and Bovis Homes PLC (LON:BVS), but raising the target for Redrow plc (LON:RDW).

However, they pointed out that their sector price targets still currently have an average of 28% upside potential.

Persimmon sector top pick

The JP Morgan analysts named FTSE 100-listed Persimmon PLC (LON:PSN) as their top sector pick for 2019, with almost 50% upside potential to their unchanged price target of 3.250p.

Persimmon is due to issue trading news on Tuesday, with Bovis Homes to follow with an update on Wednesday.

Last week, Taylor Wimpey saw its shares rise after the housebuilder said it will report full-year results in line with expectations and reiterated its previous guidance for 2019 volumes to be similar to 2018, given current market conditions, with significant volume growth potential for 2020 onwards.

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