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(Sharecast News) - Analysts at Berenberg raised their target price on construction firm Taylor Wimpey from 180.0p to 210.0p on Tuesday, citing continued momentum across the group.
Berenberg highlighted that Taylor Wimpey shares were "the second-best performer" in the sector year-to-date, up 23%, as the company's valuation was now in line with historical averages.
The German bank expects volumes and margins will continue to recover in the first half of 2021, buoyed by strong market conditions, leading it to retain its 'buy' recommendation on the stock and hike the target price.
Berenberg also stated that recent land purchases by TW laid foundations for growth, with the company raising around £510.0m in summer 2020, some of which was to acquire land opportunistically when pricing was favourable - something the analysts think should support volume growth in 2022 and beyond.
The raise also strengthens the balance sheet in the near-term, according to Berenberg, with Taylor Wimpey allocating capital towards land purchases but also using strong cash generation to likely support "attractive capital returns".
"TW is trading at 1.6x FY 2021E book value, in line with the five-year average. As a result of the increased forecasts, our price target increases to 210.0p and we retain our 'buy' rating," concluded Berenberg.
21 Aug 2023 08:54
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