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Friday, August 14, 2015
Connor Campbell - Market Analyst at Spreadex

Stock of the day 14/08/2015 – Persimmon PLC

After opening the year at £15.76 the stock quickly fell to what has so far been its 2015 nadir in the middle of January, hitting £14.28 in the market-wide tumble. Since then, however, Persimmon has been on the up and up; by the eve of its full year results at the end of February the stock had crossed £17 for the first time. And whilst the initial reaction to the results saw a bit of profit taking, Persimmon soon resumed its climb as it posted a 44% jump in pre-tax profits from £330 million to £475 million year-on-year, with a 17% increase in completions thrown in for good measure.

Persimmon PLC Chart August 2015
(Source: 14/08/2015)

However just as the stock was closing in on £18 in the middle of March Persimmon took a tumble and had fallen back to £16.50 by the start of April. A bounce back then saw Persimmon spend the rest of the month hovering around the £17.50 mark, with a mid-April trading update warning that pre-UK election jitters were having harmful effects on house-building. The week before the election then saw these nerves intensify, taking the stock back to £16.50 once again; however, as well all know, the Tory victory caused a market-wide jump, especially in the property sector, and put Persimmon back on its impressive growth track.

The post-election goodwill lifted the company to yet more all-time highs by end of June, in the process crossing £20. A preview of its half year results at the start of July showed that Persimmon has seen revenues increase by 12% over the past 6 months, jumping to £1.34 billion from £1.2 billion the year before, as well as 4% growth in the average selling price to £213,000. These figures, despite some wobbles across July, reaffirmed investors’ confidence in the stock, and after breaking its own records by reaching £21.27 on Wednesday the stock is currently trading at £20.91 (, 14/08/2015).

Persimmon has a consensus rating of ‘Hold’ with an average target price of £19.18.

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