Peel Hunt has cut its stance for MJ Gleeson PLC (LON:GLE) to ‘reduce’ from ‘hold’ in the wake of Monday’s news that the housebuilder’s CEO since 2012, Jolyon Harrison has left the company with immediate effect, citing valuation grounds.
In a note to clients, the City broker’s analysts said: “Following a very strong run in the shares in the ytd (+38%) they are trading on a CY19 PE of 13.2x (sector average 9.2x) and P/NAV of 2.1x (sector average 1.6x).”
READ: MJ Gleeson boss booted out following disagreement with board over “his remuneration and succession planning”
They concluded: “These are demanding multiples and we move our recommendation to Reduce from Hold.”
The analysts said they have left their forecast for MJ Gleeson unchanged with the group having also reiterated their guidance for the full year with an update scheduled for early July.
MJ Gleeson’s shares dropped following news of Harrison’s departure after a disagreement with the builder’s board “regarding his remuneration and succession planning”.
The group said James Thomson, the former chief executive of Keepmoat Homes Ltd - a private equity owned housebuilder selling over 4,000 homes a year - will join as its chief executive officer on an interim basis with immediate effect.
It added that a search process has been initiated to identify a long-term CEO appointment, which will include both internal and external candidates.
In late morning trading, MJ Gleeson shares were 8,.4% lower at 812p.