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(Sharecast News) - Deutsche Bank lifted Persimmon to 'buy' on Monday, noting that the housebuilder was managing sector headwinds more effectively than peers and continued to deliver resilient returns.
DB said Persimmon's interim results were "robust", with 13% yearonyear volume growth helping offset 210 basis points of grossmargin pressure and supporting 3% growth in pretax profits.
While buildcost inflation was expected to mirror that of the wider sector, Deutsche Bank said management plans to progressively counter this through selfhelp measures and continued topline growth.
To reflect updated guidance, Deutsche trimmed its FY26-28 profit forecasts by 3% to 14%, but now expects broadly flat profits across FY25/27 -a far stronger profile than the declines anticipated elsewhere in the sector - leaving Persimmon generating around 9% return on equity on average between FY26 and FY28, roughly 50% higher than comparable peers.
Deutsche Bank said this level of return supports Persimmon's roughly 1x price/net tangible assets valuation, while giving no credit for any potential market recovery or longerterm profit improvement.
DB did slightly lower its target price on Persimmon from 1,419p to 1,403p, but with the shares having weakened since its previous hold call, the analysys made the move to upgrade the stock to 'buy'.
Reporting by Iain Gilbert at Sharecast.com
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