The FTSE 100 company Taylor Wimpey PLC (GB:TW) announced a positive profit update, signaling a recovery in the housing sector. The group expects its operating profit to reach the upper limit of the guided range, which is £440 million to £470 million. The company also reaffirmed its guidance for the full year to be in the range of 10,000 to 15,000 homes.
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Additionally, the Bank of England’s decision to halt its continuous interest rate further points to optimism in the sector. The stabilization of borrowing costs is a positive development for the housing industry, offering respite after sharply rising rates had a detrimental effect on house prices and buyer demand.
Following its trading update, the shares increased by almost 3% yesterday.
Eying a Turnaround Amid Lingering Challenges
The company is witnessing signs of moderation in inflation and anticipates this trend to continue by the end of 2023. The company reported an improvement in the second half-to-date cancellation rate to 21%, a decrease from 24% in the same period of 2022. During this period, the net private sales rate per outlet per week stands at 0.51, remaining consistent with the figures from the previous year.
On the flip side, Taylor Wimpey’s total order book, excluding joint ventures worth £1.9 billion as of November 5, marked a decline of 27% on a year-over-year basis. The order book is a crucial industry metric, indicating near-term demand for the company.
The company stated that the high mortgage rates and high cost of living will continue to pose challenges in the market. Despite these, it believes its strategic advantage lies in its appealing and resilient locations.
The company will report its full-year results in February 2024.
Is Taylor Wimpey a Good Stock to Buy?
On TipRanks, TW stock has received a Moderate Buy rating based on one Buy versus two Hold recommendations. The Taylor Wimpey share price target is 129.6p, implying a change of 9.38%.
