Prospects remain bright for Persimmon, says Hargreaves Lansdown

19th Aug 2014 10:36

Persimmon is in an "extremely healthy" position, according to Hargreaves Lansdown Stockbrokers, despite concerns about the stock's valuation and a potential cooling of the UK housing market.The housebuilder delivered a strong set of interim results with 57% higher adjusted pre-tax profits at £212.9m on revenues that rose 33% to £1.2bn."Not only is Persimmon taking advantage of the benign sector backdrop, it is also investing in an effort to capitalise on further growth," said Richard Hunter, head of equities at Hargreaves.He said that in an environment where demand continues to exceed supply, Persimmon has ramped up its own pipeline with a 26% increase in new homes delivered. Meanwhile, it has invested in new land but has still managed to build a comfortable net cash position.Hunter pointed out recent worries about whether the recent rapid rise in house prices is sustainable, and highlighted that Persimmon's stock - having risen 12% over the last year - may raise some valuation concerns.Nevertheless, he said "prospects for Persimmon remain bright". "Also showing signs of improvement is the market consensus, which has recently strengthened to a 'buy'," Hunter said.The stock was up 1.1% at 1,349.3p by 10:54.BC