Broker snap: Bellway well placed for land grab

13th Oct 2009 12:41

House builder Bellway has made a believer of Panmure Gordon after announcing full year results that were ahead of the broker's expectations.'With the stock 12% off its September high, we are upgrading our recommendation from Hold to Buy,' the broker said, adding it would probably revise its earnings forecasts after the company's analysts meeting. The target price has been upped to 872p from 799p.Panmure Gordon believes Bellway is well placed to grab land at bargain prices. The group ended its financial year (to 31 July) with gearing of just 3.8% and its firepower was boosted by August's placing which raised £43.7m.'We understand that since August, Bellway has committed in excess of £100m into new land deals (primarily in the South) which should help to significantly improve the margin performance on the business in 2012 and beyond,' the broker said.Concerns over a write-down in land values in the current year appear to have evaporated, the broker believes. Panmure Gordon has abandoned its forecast of £80m in write-downs for the year to 31 July 2010, which in turn boosts the broker's net asset value per share forecast from 800p to 872p.