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Tuesday, Vistry Group PLC (VTY:LN) received a new stock rating from Morgan Stanley (NYSE:MS), starting with an Equalweight stance and setting a price target of £7.30. The investment firm’s coverage on the British housebuilder highlights the company’s innovative ’partnership model’ as a key differentiator in the industry.
Morgan Stanley’s analysts have taken note of Vistry’s strategy, which diverges from traditional housebuilding methods. The company’s approach is characterized by a capital-light model that aims to boost return on capital employed (ROCE) through a focus on partnerships. Vistry pre-sells multi-unit developments to institutional investors, housing associations, and local authorities, a move that is designed to mitigate risks associated with reliance on the private buyer market.
The analysts underscored the potential benefits of Vistry’s model, which could significantly lessen the downside risk on completion volumes. By targeting partnerships for building projects, the company strategically limits its exposure to market fluctuations that affect private homebuyers.
Morgan Stanley also identified favorable planning policy and the expansion of the professional private rented sector (PRS) as long-term structural drivers that could support Vistry’s business model. These factors are seen as conducive to the company’s focus on partnership building, which is central to its operational strategy.
The Equalweight rating suggests that Morgan Stanley views Vistry’s stock as adequately valued at the current levels, with the set price target reflecting the firm’s assessment of the stock’s fair value based on the outlined business model and market drivers.
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