On Wednesday, UBS reaffirmed its Neutral rating on Persimmon Plc (LON:PSN:LN) (OTC: PSMMY), maintaining a price target of £14.90 for the UK-based housebuilding company. The firm's perspective on the housing market suggests stability, with signs that the current subdued trading conditions might be reaching a floor.
The UBS analyst noted a minor adjustment in earnings per share (EPS) expectations for the fiscal year 2024, with a 5% reduction primarily due to a more cautious margin guide. However, projections for subsequent years remain largely unchanged. The focus remains on Persimmon's potential for recovery, as well as future margins and return on capital employed (ROCE).
Despite the current challenges, UBS anticipates a recovery in Persimmon's earnings before interest and taxes (EBIT) to exceed £800 million by the fiscal year 2028. The forecast also includes an improvement in margins to approximately 21-22% and an adjusted ROCE increase to 19%, up from the current level of around 10%.
This outlook is based on the firm's analysis of the market and Persimmon's operational performance. While the short-term forecast has been slightly revised, the long-term expectations for the company's financial health and profitability remain steady.
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