Barclays reviews UK housebuilders; upgrades Bellway, downgrades Taylor Wimpey

6th Jul 2015 13:29

Barclays upgraded Bellway to 'overweight' from 'equalweight' and raised the target price to 2,799.9p from 2,096p, noting the growth ambitions of the UK's fourth largest housebuilder, as it took a look at the UK housebuilding sector.It downgraded Taylor Wimpey to 'equalweight' from 'overweight' but raised the price target to 206.6p from 160.3p, saying its shares have been strong performers in recent months and any further upside from here is limited.The bank said it considers housebuilding fundamentals using a four pillars approach: land, planning, production and sales."We observe a largely well-behaved and highly-attractive land market, which is presenting a rich seam of opportunities - competition levels are falling and hurdle rates are rising. Although the planning system has improved, it remains costly, bureaucratic and slow," it said.It highlighted Redrow as its top pick in the sector and raised its target price on the stock to 560p from 471.60p, keeping it at 'overweight'.It said the stock's valuation still reflects the market's preference for higher dividend paying stocks.Barclays remained 'equalweight' on Berkeley, but hikes the price target to 2,3713.5p from 2,581.2p, highlighting the far more attractive environment the company finds itself in post the UK Election.Bovis remains the bank's only 'underweight' rating, despite some remaining upside, reflecting Barclays' view that it carries greater operational risks.At 1339 BST, Bellway shares were up 2.1% at 2,442p, Taylor Wimpey was down 0.2% at 191p, Redrow was up 1.3% at 466.90p,Berkeley was 0.7% higher at 3,413p. and Bovis Homes was 1.9% firmer at 1,163p.