Vistry PLC (LON:VTY) was upgraded to ‘buy’ from ‘neutral’ by UBS as analysts see a solid base for a profit rebound in 2021 and beyond.
The housebuilder can count on volume and margin growth potential supported by the existing landbank, pockets of resilience provided by mixed tenure business, and realisation of synergies post-merger.
The price target was bumped up to 790p from 730p as the discount was previously justified by the risk of an equity raise, despite being ruled out by management, while now the German bank thinks it is more than offset by a stronger outlook.
“The productivity restored to pre-COVID-19 levels provides improved visibility into near-term volumes and profitability,” analysts commented.
“Sales rates in July-August are 20% above 2019 levels with firm underlying pricing. Gross margins in the land bank are at 24.2% which provides a good upside for profit and loss margins recovery in mid-term from around 20% expected in the second half of 2020.”
Shares added 1% to 603p on Wednesday late morning.