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Peel Hunt bumps Bellway down to 'hold' on margin worries

Markets knocked housebuilder Bellway’s share price down 8% after disappointing results and a downgrade from broker Peel Hunt

Bellway PLC - Be

Bellway PLC (LON:BWY) has been downgraded by broker Peel Hunt after the housebuilder's annaul results highlighted growing pressure on margins.

The broker cut its rating to ‘Hold’ from ‘Add’, with a shrinking order book another concern.

 Bellway has 5,190 homes on order to the value of £1.31bn, which compares to £1.47bn a year ago.

Full-year results on Tuesday showed revenues rising 8.6% to £3.21bn but lower operating margins of 21% against 22%.

Analysts at Peel Hunt said the results were in line with expectations and reflected “negligible house price inflation being more than offset by ongoing build cost pressures”.

The mid and small-cap broker said it expects Bellway's margins to recede even further to 19.8% in 2020, leading to a 6% reduction in forecast profits to £640mln (£663mln).

Even so, the broker's price target rose to 3,550p from 2,945p to reflect the share price's 40% rise year-to-date.

Quick facts: Bellway PLC

Price: 4040 GBX

LSE:BWY
Market: LSE
Market Cap: £4.98 billion
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