Vistry Group’s Price Target Trimmed – Shares Firmly Off Lows

Vistry Group shares (LON:VTY) have seen their price target trimmed by Morgan Stanley analyst Peter Ajose-Adeogun. The firm lowered their price target on Vistry shares to 700p from a previous 730p, while maintaining an “Equal Weight” rating.

The analyst's move comes after a tumultuous period for Vistry, marked by a series of profit warnings in late 2024 that significantly impacted investor confidence. The shares continue to trade less than 50% of their value at the time, despite a YTD rebuild that has seen VTY add 10.9% since the start of the year.

The most recent of these warnings, issued just before Christmas, projected a lower-than-expected adjusted pre-tax profit of approximately £250 million for the year ending December 31, 2024, a considerable drop from the previously anticipated £300 million.

The company cited delays in development completions and finalization of partner transactions as the primary drivers behind this shortfall, triggering a sharp 16.2% decline in the share price to a two-year low. This announcement compounded an earlier profit warning in October 2024, where Vistry revealed an underestimation of build costs on several projects, resulting in a £115 million hit and a staggering 25% plunge in share value, wiping out roughly £1 billion from its market capitalization.

In response to these challenges, Vistry has been actively managing its capital structure through a share buyback program. The company has repurchased thousands of its ordinary shares, effectively reducing the total number of shares in circulation and potentially boosting shareholder value. This move indicates a commitment to returning capital to investors and signalling confidence in the long-term prospects of the company.

The key question now is whether Vistry can successfully navigate the current headwinds and capitalize on its partnership model, which focuses on working with housing associations and local authorities to deliver affordable homes. The success of this model will be crucial in determining the company's ability to improve profitability and regain investor confidence.