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Taylor Wimpey, Persimmon upgraded, Barratt and Crest Nicholson downgraded as Barclays reassesses UK

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Taylor Wimpey PLC (LON:TW.) and Persimmon PLC (LON:PSN) have both been upgraded to ‘overweight’ from ‘equal weight’ by analysts at Barclays, who said despite a near-term risk to the UK housing sector, more government support is likely to offset these and prevent a “material drag on sector returns”.

In a note on Wednesday, the company also hiked its price targets for Taylor Wimpey to 170p from 160p and to 3,000p from 2,800p for Persimmon, however, they also said that while the recent stamp duty holiday and the Help to Buy scheme had boosted demand for housing, they saw a “sharp fall in mortgage availability” and rising unemployment in the wake of the coronavirus pandemic as risks to transaction levels and profitability in the sector.

Despite this, the bank said support from the government would help offset the mortgage shortage and expected an earnings recovery in 2021 to be “underpinned by strong order books” with dividends also expected to resume.

“We continue to see value in the sector, with an average of 12% potential upside to our price targets”, Barclays said.

Other firms the received positive changes were RedRow PLC (LON:RDW), which was hiked to 645p from 600p and Countryside Properties PLC (LON:CSP) which was raised to 510p from 500p.

However, not all companies in the sector saw a positive reassessment, with Barratt Developments PLC (LON:BDEV) downgraded to ‘equal weight’ from ‘overweight’ while its target price was raised to 725p from 580p. Crest Nicholson Holdings PLC (LON:CRST) was also downgraded to ‘equal weight’ from ‘overweight’ and retained at 335p, while Berkeley Group Holdings PLC (LON:BKG) was cut to 3,990p from 4,180p and left at ‘underweight’.

The two upgraded stocks, Taylor Wimpey and Persimmon, were up 1.8% at 157.4p and 2.5% at 2,725p in late-morning trading.

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