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Berenberg slashes forecasts for Vistry after profit warning
(Sharecast News) - Berenberg has slashed its target price for Vistry by more than a quarter after an unscheduled trading update and profit warning from the housebuilder this week.
After underestimating build costs on nine schemes in its Southern Division, Vistry said it now expects FY24 adjusted pre-tax profit to be £80m lower at around £350m, a hit of about 20%. FY25 forecasts have also been downgraded by £30m.
Berenberg said that the profit warning doesn't challenge the fundamentals of the partnership business model, but raises questions about what is an achievable and sustainable mid-term profit margin, "which in turn also has an impact on ROCE outcomes", said analyst Harry Goad.
"Secondly, we think this issue raises a traditional industry concern about the risks faced by any housebuilder that is growing volumes at pace given the associated challenge of achieving acceptable and well-balanced outcomes across matters such as build quality, customer service and profitability," Goad said.
The broker cut its target price for the stock from 1,380p to 1,000p and kept a 'hold' rating.
Shares were up 0.3% at 966p by 1015 after tumbling 24% the previous session.
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