Housebuilder Redrow (RDW) has set ambitious targets for 2020 of approximately £2.2bn in turnover and pre-tax profit of £430m thanks to its strong performance and robust demand.
Sales have increased 20% to £1.66bn, driven by higher legal completions and a 7% rise in the the average selling price to £309,800 in the year to 30 June 2017.
The company also anticipates the dividend will rise to 32p per share in 2020, which is impressive considering Redrow has hiked its full year dividend by 70% to 17p.
Numis analyst Chris Millington says revenue and pre-tax profit has smashed expectations and upgraded his pre-tax profit estimates from £336m to £355m in the year to June 2018.
In 2019, pre-tax profit is anticipated to hit £395m, up from £370m and is expected to be supported by a stronger forward order book and trading, as well as a contribution from Collindale from 2018.
Millington has also boosted his target price to 729p thanks to the long-term forecasts, but downgraded from ‘buy’ to ‘add’ due to the strong share price.
Canaccord Genuity’s Aynsley Lammin believes the valuation looks ‘less attractive’ but that the medium term guidance supports the share price.
She says consensus is ‘likely to move up by 6% to 8%’ in year to 30 June 2018. Redrow currently trades on a forecast 8.1 times earnings per share over the same period.
Shares in the housebuilder are up 4.4% to 647.5p.
