The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
The company’s shares have been pushing higher since its trading statement in May, which covered the first three months of the year. The share price recently hit an eight-year high on the back of the announcement. The update from the homebuilder was a continuation of the excellent full-year results that were announced in February.
Last year the firm revealed a 46% jump in profits and a 69% increase in profits. But by far the most impressive metric was the 159% boost to full-year dividend. Bovis Homes experienced a 7% rise in costs but that was overshadowed by the 11% jump in average selling price, and the number of completions grew by 115.
The macroeconomic and political environments are both playing a factor in Bovis’ success; the loose monetary policy by the Bank of England, combined with customer’s appetite for credit, and the icing on the cake – the government’s help to buy programme. The Conservative party’s assistance to the first-time buyers will stand to benefit Bovis Homes over the next five year, and the BoE is in no rush to hike rates any time soon. This also works in Bovis’s favour.
Bovis Homes will reveal its full-year numbers in February 2016, and the market is expecting revenue of £931 million and operating profits of £135 million. These forecasts represent a 15% jump in revenue and a 28% increase in operating profit.
Investment banks are bullish on Bovis Homes, and out of the 16 recommendations, 13 are buys, two are holds, and one is a sell. The average target price is £12.94, which is 15% above the current price. Equity analysts are also very bullish on Redrow, and of the 16 ratings, 11 are buys, and five are holds. The average target price is 469p, which is 4.5% above the current price.
The share price of Bovis Homes is in a steady uptrend and £12 is in the first target, and if that mark is cleared the all-time high of £12.20 will be insight. Any pullback will find support at £11, and if that mark is punctured then support at £10.15 will be found.