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Investing.com -- RBC Capital Markets has updated its ratings and price targets for several U.K. housebuilders, citing revised RBC Elements home-fi data and changes to valuation assumptions.
Taylor Wimpey (LON:TW) was downgraded, while Berkeley Group (OTC:BKGFY) and Persimmon (LON:PSN) received upgrades based on divergent fundamentals and market positioning.
Taylor Wimpey was downgraded to “sector perform” from “outperform,” with its price target cut from 150p to 135p.
RBC’s proprietary home-fi data revealed a persistent decline in site numbers and stock levels, prompting downward revisions to site count estimates - FY2026 was lowered from 245 to 235, FY2027 from 265 to 245, and FY2028 from 280 to 270.
The valuation multiple was adjusted from 1.30x to 1.10x to reflect slower expected growth.
While RBC acknowledged Taylor Wimpey’s land bank and infrastructure as long-term strengths capable of supporting higher volumes and margins, near-term challenges such as planning delays were flagged as headwinds.
In contrast, Berkeley Group was upgraded to “outperform” from “underperform,” with its price target raised to 4,900p from 4,550p.
The upgrade followed a period of share price weakness and reflected RBC’s confidence in Berkeley’s ability to sustain premium valuations in softer markets.
The P/B multiple was raised from 1.4x to 1.5x. RBC highlighted the company’s focus on large, long-duration sites, which enhance earnings visibility, and its distinctive model that emphasizes upfront deposits of 10% or more and avoids bulk sales.
Berkeley’s strategy to grow its own build-to-rent platform was also cited as a strength.
Profit before tax guidance of £450 million for FY2026 remains unchanged, with similar expectations for FY2027. Shares were trading at 3,622p.
Persimmon was upgraded to “sector perform” from “underperform,” with a price target increase to 1,375p from 1,325p.
RBC Elements data showed progress in opening new sites and maintaining healthy stock levels.
The P/B multiple was adjusted slightly from 1.20x to 1.25x. RBC underscored the importance of site count for volume growth, noting Persimmon’s long-term average private sales rate of 0.65 homes per site per week, a level historically supporting 20% operating margins.
Although margin growth may remain constrained by previously acquired land during flat pricing periods, the company’s operational momentum is viewed positively.
Persimmon shares were trading at 1,208p, on a CY2025e P/B of 1.12x and a dividend yield of 5%, both above sector norms.