Broker snap: Countrywide a 'key beneficiary' of housing recovery, says Credit Suisse

30th Sep 2013 10:49

Credit Suisse has reiterated its 'outperform' rating for housebuilder Countrywide, saying that an earlier-than-expected start to 'Help to Buy' should give the company a boost.The government has announced this weekend that it will launch the second phase of the 'Help to Buy' scheme next week, two months earlier than originally anticipated."This is supportive of our above-consensus earnings growth estimates for CWD," said analyst Eugene Kierk from Credit Suisse."Countrywide's share price has been weak during the past few weeks owing to share placings and uncertainty over a possible change/cancellation of 'Help to Buy' 2. With these removed, we strongly reiterate our 'outperform' rating and 705p price target."The bank said it sees Countrywide as a "key beneficiary" of a full UK housing -market recovery given that it is a nationwide estate agent."We expect a three-year earnings per share (EPS) compound annual growth rate (CAGR) of 45% as total transaction volumes increase 15% next year and 20% in 2015. With additional gearing from financial services, surveying and conveyancing as well as continued roll out growth in lettings we believe that Countrywide remains a high growth undervalued mid-cap company."Credit Suisse said that Countrywide trades at 8.8 times 2015 earnings, which is "cheap" given a 45% EPS CAGR (estimated between 2013 and 2016).The stock was down 0.87% at 513.5p by 10:56 on Monday.BC