Bovis Homes fundamentally undervalued, Panmure Gordon says

23rd Feb 2015 11:07

Strong annual results from housebuilder Bovis Homes received a lukewarm reaction from the market on Monday as they broadly met forecasts, though broker Panmure Gordon chose to reiterate its 'buy' rating saying that the shares remain cheap.Analyst Rachel Applegate said: "We maintain our belief that Bovis is fundamentally undervalued at current levels, and the stock is our key housebuilding pick."Pre-tax profit jumped by 69% to £133.5m in 2014 on revenues that were 46% higher at £809.4m, helped by a record year for legal completions.While the dividend was hiked by 159%, Applegate pointed out there were "no surprises" in the report given that payout had already been proposed.Looking ahead, she said: "It appears that, in line with commentary from other housebuilders over the past few days, 2015 has started well for the group, with forward sales ahead year-on-year."The analyst pointed out that the stock is trading on a price-to-net asset value ratio of 1.33 compared to the wider sector which trades at a multiple in excess of 1.80.Bovis shares were flat at 947.64p, compared with Panmure's 1,072p target price.