BoA Merrill lifts Persimmon price target on first-half results

18th Aug 2015 11:05

(ShareCast News) - Bank of America Merill Lynch has lifted its price target on Persimmon to 2,300p from 2,110p following the company's first-half results.The bank said 2015 has been a good trading period for the company and despite high land investment, has resulted in a very strong net cash position."This, along with solid fundamentals and strong cash flow, gives us confidence that the 2015 and 2017 10p dividends could be revised materially upwards," it said.It said Persimmon currently sees an attractive land market and is investing heavily in it, but lower investment could allow the company to potentially double its dividend stream if it chose to do so.Merill said the stock remains attractive, trading on an estimated 2016 yield of 5.2%. It said that while this is a premium to the sector, it is sustainable given the quality of the cash flow."Persimmon's track record of being the only UK housebuilder that traded through the early 1990s UK housing recession as continuously profitable, as well as its current landbank and net cash position, make this the most defensive UK housebuilder, in our view."Merrill maintained its 'buy' rating on the stock.At 1104 BST, Persimmon shares were 1.8% lower at 2,081.93p.