Citi downgrades Vistry, sees better value elsewhere

By Michele Maatouk

Date: Friday 10 Jul 2020

(Sharecast News) - Citi downgraded its stance on shares of Vistry to 'neutral' from 'buy' on Friday as it tweaked its estimates to reflect "a slower fixed cost absorption on the back of the Covid-19 disruption".

The bank said that with management focus clearly on integration, delivery of synergies and deleveraging, the housebuilder is less likely to benefit from the potential demand boost in the short term driven by the recent stamp duty cuts.

"As a result, we see limited upside on volume performance near term and risk-reward looks less attractive in this context," it said. Citi said it sees better value elsewhere in the sector.

On Thursday, Vistry reported a slump in first-half housebuilding revenue but pointed to a second half recovery on the back of improving demand as the coronavirus lockdown eased.

Britain's housing market was shuttered during the two month lockdowns, but construction and sales activity had improved since mid-May and Vistry said it expected the stamp duty exemption announced by the government on Wednesday would support buyers in the months ahead.


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