Taylor Wimpey – Spring in its step this selling season
Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “Despite the UK housing market sitting on uncertain ground, Taylor Wimpey’s made a solid start to 2024 with the Spring selling season progressing as expected. Affordability pressures remain a key issue to wrestle with, but the group called out good mortgage availability and sustained consumer confidence as tailwinds supporting firm levels of buyer interest. Tough trading conditions in 2023 saw revenue and profits fall significantly. But this rebase lower makes for easier comparative numbers moving forward, and Taylor’s trading early in the new year has shown some positive signs. A combination of real house price declines and lower mortgage rates have eased affordability pressure a little, resulting in a marginal uplift in sales rates in the year to 21 April. The order book remains in good shape too, with £2.1bn worth of bookings giving Taylor Wimpy plenty of revenue visibility.
However, despite the trends of a modestly improving market, buyers are likely to remain sensitive to price going forward, so it was unsurprising to see management remain cautious and hold full-year guidance firm in today’s update. Full-year performance will be second-half weighted as improved pricing and lower build cost inflation feed through and improve profitability. All in, Taylor Wimpey looks to be one of the better-placed UK housebuilders, and the current valuation could be an attractive entry point for investors willing to ride out near-term uncertainty in the housing market.”
