Goldman Sachs removes Taylor Wimpey from Conviction List but keeps 'buy' recommendation

27th May 2015 10:17

Goldman Sachs removed Taylor Wimpey from its Conviction List, but kept the stock at 'buy' with a 204p price target, following the strong share price performance mainly on the back of solid earnings growth.Since adding it to the Conviction List on 8 October 2013, the stock is up 87.2% versus the FTSE World Europe up 10.9% and over the last 12 months, it's up 69.2% versus the FTSE World Europe up 3.8%, noted GS."We continue to see Taylor Wimpey as geared to the ongoing recovery in UK housebuilding and expect it to exhibit strong earnings growth and free cash flow generation," it said.With Taylor Wimpey having reached its optimal UK land bank size of around 75,000 plots, Goldman said it expected land spend to moderate, allowing free cash flow generation to increase to £490m in 2017 from £180m in 2014. "This, in our view, will allow the company to pay out significant cash returns."