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Taylor Whimpy (LSE: TW.) Stocks have fallen 25% over the past year, reaching 114p each today. As a shareholder, that’s a fact that I have painfully realised. My position is currently red.
There are several factors behind this. It was a difficult time for housing developers as they built supply chain issues, cost inflation and increased mortgage affordability. But you can FTSE 100 Will house builders be recycling their assets in the next 12 months?
Here’s what city analysts are thinking about Taylor Wimpy’s stock price outlook:
Broker predictions
It’s worth starting with caution. Many efforts and clever mathematical formulas that support analyst stock targets should not be rejected. However, there is no doubt that experts have the opinion. No one has a crystal ball.
A useful reference point for investors to keep in mind, but broker predictions should take salt in a pinch. They certainly do not replace in-depth independent research to provide a deeper understanding of potential investment opportunities.
With these warnings in mind, here is a breakdown of Taylor Wimpey’s stock recommendations:
| recommendation | Number of Analysts |
|---|---|
| buy | 4 |
| Outperform | 7 |
| Owned | 5 |
| sell | 0 |
| Strong selling | 0 |
That’s a series of encouraging opinions. None of the 16 institutional analysts covering the stock will give a sell or a strong sell rating. And over two-thirds are particularly bullish on purchasing outperform or recommendations.
If we dig into the details, the consensus 12-month stock forecast for urban brokers is 144p. If that were to happen, it represents a very healthy 26% increase from today’s level.
At the top, Jeffreys I’m the most optimistic person. That 177p stock price forecast means a 55% rally next year. Supporting Government policies for House Builders are central to the group’s views. The workers’ goal is to build a new 1.5m home by 2029.
but, Morgan Stanley We consider Taylor Wimpey’s stock outlook to be more modest. Recently, we have reduced our forecast to 120p. That still improves, but only 5% profit. The bank cites the company’s exposure to London and southeastern England as a concern. Home prices are slowing down in these regions.
My view
I think Taylor Wimpey’s shares are more likely to move in the better over the next 12 months than in the past year. A forward price (P/E) below 13.5 means the appeal of today’s ratings.
Also, don’t forget to give a dividend yield of 8.2%. This adds a significant amount of overall stock returns. A shy net cash of £565 million means dividends that are well supported by a robust balance sheet, even if payments are not guaranteed.
Jeffries is right to point out a potential boost from government policies. Taylor Wimpy’s Land Bank with a plot of around 79,000 means it’s in a great position to get vibrant.
Certainly, the decline in the UK housing market is a risk, as it narrows down margins for home builders and reduces demand. Increases in stamp duty will not help with the problem. Neither of them are high interest rates and could remain longer than expected amid sticky inflation.
Nonetheless, I still think there is a good reason to hold the stock. Taylor Wimpey stocks are scheduled to trade higher this time next year, and will consider profits from the investment. Let’s see if I’m right.