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Taylor Wimpey (TW.) share price forecast: Where next?

By Rob Griffin

Edited by Alexandra Pankratyeva


Updated

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Stuttgart, Germany - 02-26-2022: Person holding smartphone with logo of British housebuilding company Taylor Wimpey plc on screen in front of website. Focus on phone display. Unmodified photo.
Taylor Wimpey (TW.) share price forecast: Where next? – Photo: Shutterstock

UK housebuilder Taylor Wimpey (TW.) recently launched a £150m share buyback after more than doubling its profits last year.

The company revealed pre-tax profits had rocketed 157% to £679.6m in 2021 as the world started returning to normal after the Covid-19 lockdowns.

However, those strong results haven’t been reflected in the stock price, which has been hampered by investor concerns over the broader housebuilding sector.

Is the Taylor Wimpey share price prediction bullish or bearish? In this analysis we take a look at the company’s recent results and assess the likelihood of the stock price rising over the coming months.

Taylor Wimpey share price analysis: Housebuilding concerns

Investors in Taylor Wimpey have had a tough time. The stock was down 25% from 178p at the start of 2022 to 134.40p as the market closed on 11 March.

Although it’s risen 33% since the start of the Covid-19 lockdowns back in March 2020, closer analysis shows that the Taylor Wimpey historical share price has been on a real rollercoaster ride.

For example, at the end of January 2021, the stock was trading at 146.45p. It then rose 31% to 191.70p by April, before falling 21% to 150.65p in July 2021. It then increased a similar amount by the end of August, before settling at 175.50p as the year ended.

The five-year price chart shows that the Taylor Wimpey share value decreased by 27% as of 14 March 2022.

Taylor Wimpey (TW) five-year performance

According to Charlie Campbell, an analyst at Liberum, the share prices of many housebuilders are now trading close to cycle lows, due to a number of issues.

“These are cladding taxes, rising mortgage rates and other consumer costs, build cost inflation and the ending of the Help to Buy scheme,” he said.

However, he sees significant upside in housebuilders’ shares due to confidence that these obstacles will be overcome, along with high wage growth and appetite for homes.  

“We expect outperformance as profits beat estimates and valuation improves as risks diminish,” he said. “The housing market has started 2022 strongly.”

Taylor Wimpey (TW.) stock fundamental analysis: Latest earnings

The company’s results for the year ended 31 December 2021 saw a 53.6% increase in revenue to £4.28bn and a 47% rise in the number of total UK home completions to 14,087. 

Operating profit came in at £828.6m, representing a 175.9% improvement over the £300.3m figure achieved in the full year 2020.

The basic earnings per share, meanwhile, came in at 15.3p. This was 142.9% up on the previous year’s 6.3p level.

Looking ahead, the company highlighted a positive forward order book of 10,009 homes, as at the end of 2021, valued at £2.5bn.

It has also acquired around 14,000 plots during the year, increasing the short-term landbank by approximately 8,000 plots to 85,000, in order to support future growth.

Share buyback programme announced

Taylor Wimpey also announced it had instructed Citigroup Global Markets Limited to purchase up to £75,000,000 of the company’s shares.

This was in relation to the £150,000,000 share buyback programme, to return excess capital to shareholders and enhance earnings per share.

Chief executive “very pleased”

In a statement, chief executive Pete Redfern said he was very pleased with the company’s operational, financial and customer service performance in 2021. 

“Demand for our homes remains strong and we continued to drive significant margin improvement in 2021, as we optimise selling prices and maintain our strong focus on cost efficiency,” he said.

Redfern noted the “challenging geopolitical, macro-economic and regulatory environment”, but remained confident of delivering modest growth in completions in 2022, and making further progress towards the operating margin target.  

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“With the opportunistic purchase of additional land over the last 18 months, our land pipeline leaves us well placed to accelerate high-quality, profitable volume delivery from 2023, generating additional value and compelling investor returns,” he added.

Analysts impressed with results

Matt Britzman, an equity analyst at Hargreaves Lansdown, said the company had “come out hot with a strong set of results” as revenue and profits beat expectations.

“Sales up 53.6% takes them back to where they were pre-pandemic and the seemingly never-ending house price rises, alongside some good cost controls, meant operating margins of 19.3% were inching ever closer to the group’s target of 21-22%,” he wrote in a note.

Britzman also pointed out that demand seems to be sticking, with forward sales looking strong into 2022 as buyers aren’t being put off by higher mortgage costs as interest rates rise. 

“Taylor Wimpey took a different approach over the pandemic, buying up land at good prices while others turned off the taps,” he added. “It was a bold move at the time, but with the market looking buoyant it should pay off over the next couple of years.”

Taylor Wimpey share news: New chief executive appointed

Following the announcement in December 2021 that Pete Redfern was stepping down as chief executive after 14 years in the role, his replacement was named in February.

It will be Jennie Daly, currently the group operations director of the company, who will take the reins on 26 April 2022 at the conclusion of the annual general meeting.

In a statement, Daly said it was “an honour and privilege” to take on the role, emphasising that she was delighted to have the support of the board. 

“This is an outstanding business with a strong landbank and strategic land pipeline, and a talented and committed team,” she said.

Taylor Wimpey stock forecast: What do the experts say?

According to Danni Hewson, financial analyst at AJ Bell, the big question for all UK housebuilders is how the cost-of-living crunch will affect the purchasing power of would-be homeowners.

“At the moment the answer seems to be very little, but then the real test is clearly yet to come,” she told Capital.com.

However, investors have appeared less than impressed with the sector for a while, she pointed out, with share prices down by double digits across all FTSE 350 housebuilders.

“Supply issues, rising commodity and labour costs, cladding remuneration and changes to Help to Buy have all, undoubtedly, factored into investor decision making,” she said.

However, Hewson believes there is one equation that hasn’t changed: demand still outstrips supply, and borrowing costs are still incredibly cheap even after the next anticipated interest rate rise. 

“For buyers, saving will get a little harder and for builders, margins a little tighter, but if this budget crunch helps steady prices there’s plenty about the sector to tickle interest,” she added.

Sam Cullen, an analyst at Peel Hunt, has adjusted his target price for the stock down to 180p from 195p, due to additional tax charges, but upgraded the recommendation from ‘Add’ to ‘Buy’.

“The outlook for the market is very positive, with strong levels of demand and excellent price momentum,” he wrote in a note. “With outlet numbers set to improve in the second half of the year, the group is well placed to drive volume growth in full year 2023 and beyond.”

Taylor Wimpey (TW) share price forecast: Targets for  2022, 2025 and 2027

Are Taylor Wimpey shares a ‘buy’, ‘sell’ or ‘hold’? According to the algorithmic forecasts of WalletInvestor (as of 14 March), TW. stock could be a “bad long-term (one year) investment”, with the share price expected to fall 7.5% to 124.26p by March 2023.

The site predicted the stock could close 2022 at 122.44p and then fall to 107.31p by March 2025. Although the site didn’t give targets as far ahead as 2030 for TW stock, the Taylor Wimpey five-year forecast to March 2027 saw a further slump to 99.29p – 26% below the current level. 

However, Wall Street analysts were far more optimistic as of 14 March. The consensus view of eight analysts, compiled by MarketBeat, was that the stock could be a ‘buy’ and rise 50% over the coming year to an average Taylor Wimpey share price target of 201.75p.

The highest TW. share price forecast suggested the stock could increase 64% to 220p over the next 12 months, while even the most pessimistic had shares rising 41% to 189p.

Taylor Wimpey (TW) analyst ratings and price targets

When looking for Taylor Wimpey (TW.) stock predictions, it’s important to bear in mind that analysts’ forecasts and algorithm-based price targets can be wrong. Predictions are based on making fundamental and technical studies of the TW. stock historical price pattern – but past performance does not guarantee future results.

It is important to do your own research and always remember your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. You should never invest funds that you cannot afford to lose.

FAQs

Is Taylor Wimpey a good buy?

Whether or not Taylor Wimpey is a suitable investment depends on your own investment objectives – and the opinions you form based on your own research. 

Remember, it’s important to reach your own conclusions regarding the company’s prospects and likelihood of achieving analysts’ targets.

Why have Taylor Wimpey shares been falling?

The company has been affected – in the same way as other housebuilders – by concerns about taxes, rising mortgage rates, and the prospect of an economic downturn fuelled by higher energy costs. This has taken the shine off the sector’s strong results.

Will Taylor Wimpey’s share price go up or down?

No one knows for sure. The consensus view of analysts compiled by MarketBeat as of 14 March was that the stock could rise 50% over the coming year to 201.75p. However, it’s important to carry out your own research, as these projections may not turn out to be correct.

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