Housebuilder Persimmon 65% profit boost still leaves analysts still unimpressed

Shares down as analysts warn the shares are overrated with better value elsewhere

More positive news from the house building sector as Persimmon revealed a 65% jump in half-year profits with house sales up and property values rising.

Underlying pretax profits hit £98.7m on a revenue rise of 13% to £806.7m in the first six months of the year.

The Government’s NewBuy scheme to help first time buyers get a 95% mortgage has been successful for Persimmon, which has actively pushed the initiative and seen 220 new homes sold using the product.

First half completions were up 6% to 4,712 new homes, with the average selling price increasing 7% to £171,206, due to the completion of more family homes.

However, the company, the UK’s largest homebuilder by market value, said:

We expect conditions in the UK housing market to remain challenging reflecting the wider issues within the economy. However, we anticipate continued firm underlying demand for new homes but this will remain constrained by the low level of mortgage availability.

We are continuing to work with the mortgage lending institutions to help provide customers with appropriate opportunities to gain access to the housing market.

It comes the day after rival Bovis reported a boost in house sales, while Taylor Wimpey recorded a recent operating profit jump to £100.9m compared with £133m in the first six months of 2011.

Despite the strong results, analysts seem unimpressed with some cutting their ratings.

Numis downgraded its position to “hold” from “add” warning the stock trades at a premium to its assets, with better value elsewhere.

Panmure Gordon cuts its rating to “hold” from “buy” after shares rose 33% since early June, saying

Whilst Persimmon has delivered a very strong set of results and looks well placed for the future, this is factored into the share price in our view.

Shore Capital maintains its “sell” recommendation, suggesting:

We continue to favour Barratt which is trading at circa 28% discount to NAV [net asset value]

Shares are down 15p, 2.1%, at 690.1p.

Simon Neville © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

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