UK Homebuilder Stocks: RBC Cuts Vistry and Persimmon, Raises Barratt Redrow

RBC Capital revised its outlook on major UK homebuilders in a note this week, reflecting varying levels of confidence in their performance amid a challenging housing market.

While Vistry Group (LON: VTY) and Persimmon (LON: PSN) received downgrades, Barratt Redrow (LON: BTRW) was upgraded, signalling a nuanced approach to the sector’s prospects.

Vistry Group was cut to Sector Perform from Outperform, with its price target slashed from 825p to 500p.

RBC Capital’s analysts pointed to heightened risks following two profit warnings in as many months.

In addition, they noted concerns over unaudited provisions and cost calculations added to the cautious outlook, with downside risks still looming.

Persimmon faced a steeper downgrade, moving to Underperform from Sector Perform. RBC adjusted its price target downward to 1,275p from 1,475p, citing concerns about margins embedded in its landbank.

Rising build costs and regulatory changes flagged in Persimmon’s Q3 commentary are said to suggest potential challenges ahead, particularly as full-year results near.

In contrast, Barratt Redrow received a boost. The company’s shares were upgraded to Outperform from Sector Perform, with its price target holding steady at 575p.

Despite their downgrade of Vistry and Persimmon, RBC said they believe UK housebuilders have been oversold since the government’s recent budget.

They note that the sector is now trading below tangible book value, presenting opportunities for a rebound, particularly in well-positioned players like Barratt Redrow.