Broker snap: Persimmon's margins on the mend

2nd Mar 2010 11:57

The wheels have come off the Persimmon revival bandwagon this year with the stock coming down from its January peak of around 500p to dip below 400p at one point but they are back on the rise after Tuesday's results, with good cause, in Panmure Gordon's view.The broker has upgraded its price target for the housebuilder to 555p from 549p and retained its 'buy' recommendation after Persimmon announced 2009 figures that were ahead of Panmure's expectations.'A continued focus on operating margins at the business, has significantly improved profitability and this should continue. Whilst concerns remain over the fragility of the UK mortgage market and ongoing economic conditions, these are reflected in our assumptions,' Panmure Gordon said, adding that it would revise its projections after the company's analysts' meeting.The Panmure team's early thoughts are that its £13m profit before tax forecast for 2010 will be bumped up, possibly as high as £75m. 'Persimmon has £900m of forward sales in the hopper, which has improved from the £640m achieved at the start of January. Within that, the group comments that pricing has held firm and the group continue to concentrate on improving margins,' the broker said.