Berenberg lowers target price on Bellway

(Sharecast News) - Berenberg cut its target price on Bellway from 2,800p to 2,100p on Thursday after trimming its profit forecasts following the housebuilder's latest trading update.

Berenberg said it had reduced its pretax profit and earnings estimates by an average of 16% and 7% over FY26-28, respectively, reflecting what it sees as renewed headwinds for both Bellway and the wider sector.

While the group maintained guidance for FY26, Berenberg argued that weakening customer demand and rising materials costs were likely to weigh on outeryear performance.

Bellway confirmed expectations for FY26 volumes of 9,300 to 9,500 homes and underlying earnings of �320m to �330m, implying around 7% growth at the midpoint. However, it also pointed to a "moderation" in demand through April and May and noted fresh upward pressure on buildcost inflation.

The German bank left its FY26 numbers broadly unchanged but cut assumptions for FY27 and FY28, lowering both volume and margin forecasts. It now expects FY27 pretax profit of �273m, down 11% yearonyear, followed by �318m in FY28. The new forecasts sit around 23% below its previous estimates.

Berenberg also assumes an ongoing �150m buyback across the period, which reduces the share count and limited its downgrade to EPS - now around 11% lower on average for FY27-28.

On valuation, Berenberg said Bellway trades on 0.5x TNAV and 9x FY26 earnings, noting that while the balance sheet remains strong, nearterm pressures continue to dominate the investment case.

Reporting by Iain Gilbert at Sharecast.com