Having risen to £29 by mid-June, Persimmon shares went on to have an abject second half of 2018, plunging to near 2-year, sub-£18.50 lows across December.
It appeared to get its confidence back at the start of 2019, surging back above £24.70, only for some troublesome rumours – more on those below – to leave Persimmon shares at a current trading price of £23.22.
Helping its 2019 rebound was mid-January’s trading update. In large part thanks to the ‘Help to Buy’ scheme, the company announced a 4% increase in total Group revenue to £3.74 billion, alongside a 3% rise in legal completion volumes and a 1% jump in the average selling price to £215,560. Following on from this, Persimmon said its full year pre-tax profit would be ‘modestly’ ahead of market expectations, which currently stand at £1.07 billion against the previous year’s £966 million.
The reaction to Tuesday’s results, however, may be less dependent on those figures, and more on its response to recent reports of government displeasure in the company. According to sources close to housing secretary James Brokenshire, the MP is ‘increasingly concerned’ with the behaviour of Persimmon in the last 12 months, with leasehold, build quality and a lack of top level accountability all problems. Not great considering an extension of ‘Help to Buy’ contracts from April 2021 is coming soon…
Beyond that, Brexit will likely feature in whatever the company has to say on Tuesday, while investors will also want an update on current trading, with Persimmon stating in January that its forward sales at 31st December 2018 were up 3% to £1.395 billion.
Persimmon shares have a consensus rating of ‘Hold’ alongside an average target price of £26.57.
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