In 2014 Bovis Homes Group had an ‘excellent’ year, as the number of homes it sold rose to 3,635. This was a 20% increase on the year prior and also a record number for the house builder. The average selling price per home increased by 11%, and annual profit rose by 169%.
Bovis Homes has plans to ramp up the number of houses it constructs in the coming years, and the target is for between 5000 and 6000 homes. The large jump in the output target underlines how confident the company is in the UK property market.
Demand for properties is high, and the help-to-buy scheme announced by George Osborne under the previous government was one of the factors behind Bovis Homes recently hitting a record number of sales. When the Conservative victory was announced last week, all the home builders traded higher on the back of the news.
The Bank of England’s loose monetary policy has also played a role in driving up property prices in the UK. Some traders are beginning to pencil in an interest rate rise at end of this year, and even more are looking to 2016 for a rate hike. Bovis Homes will continue to benefit from ultra-low interest rates and more aggressive lending policies by high street banks.
The builder will report its full-year numbers in February 2016, and the market is expecting revenue of £931 million and adjusted net income of £135 million. These forecasts represent a 15% rise in revenue and a 28% increase in adjusted net income. The company had strong finish to the end of the previous financial year, and second-half revenue was £487 million, and adjusted net income was £66 million, and the market was expecting £473 million and £65 million respectively.
Equity analysts are very bullish on Bovis Homes, and out of the 17 recommendations, 14 are buys, two are holds, and one is a sell. The average target price is £11.10, which is 11% above the current price. Investment banks are also very bullish on Redrow, and out of the 17 ratings, 12 are buys, and five are holds. The average target price is 426p, which is 5% above the current price.
The stock has been an upward trend since October, and £10 is providing support and £11 is the initial upside target. A move through it will put the all-time high of £12.20 on the radar. A drop below £10 will bring the £9.80 region into play, and below that the £9.05-£9.15 area will be the next level of support.