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Persimmon Shares Have Fallen 20% in One Month. What’s Next?

Simon Mugo trader
Updated 6 Jul 2023

The Persimmon plc (LON: PSN) share price has fallen 20% in the past month as investor sentiment towards the company soured, driven by the recent interest rate hikes by the Bank of England, whose latest interest rate decision was a jumbo 0.50% hike.


YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.


The decline in Persimmon’s share price is driven by several fundamental factors, such as its customer base, of which 42% are first-time buyers who may have difficulty getting mortgages for their homes given the higher rates in the market that they may not afford. 

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The home building company has also been hit hard by the end of the ‘Help to Buy’ government support scheme for home buyers, which has been scrapped in the UK except for Wales. The program accounted for 21% of all the homes completed and sold by the company in 2022. 

The record-high inflation figures have also affected the company as it deals with the higher costs of materials and labour that it has to pass on to buyers in the form of higher prices. The company expects to complete between 8,000 and 9,000 homes this year, but this guidance could be revised lower. 

Persimmon is expected to release its latest earnings results soon, with many looking forward to the board’s outlook for the company as we enter calendar H2 2023. Analysts have been shrinking their estimates for the company’s EPS from a high of 110.98p to a low of 85.39p

The company expects the number of homes completed this year to decline by about 40%, affecting its revenues. On the other hand, its profit margins are likely to be hit by the higher operating costs unless it can successfully pass on the extra costs to its customers. 

The UK housing market is facing a challenging operating environment, with most homebuilding companies, including Taylor Wimpey and Berkeley Group, experiencing a decline in completions. However, due to its unique dynamics, Persimmon has been hit harder than the rest.  

Still, the long-term dynamics for Persimmon shares remain optimistic, given that the demand for housing in the UK far outstrips the available supply of homes. 

*This is not investment advice. 

The Persimmon share price. 

The Persimmon share price has fallen 20% over the past month and is down 19.41% for the year.


YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.


Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading