Taylor Wimpey Share Price Forecast December 2021 – Time to Buy TW?

Shares of British housebuilding company Taylor Wimpey (LSE: TW) are in the green today, currently trading at around £164.70 at the time of writing. The shares have gone nowhere year to date and is continuing the trend today, despite the company recently issuing an encouraging update last month.

Taylor Wimpey – Technical Analysis

According to Taylor Wimpey’s financial statement, the market cap of the company is at £593.399 billion with total assets worth £615.76 billion. Revenue for 2020 was at £279.02 billion with a profit margin of 7.78% compared to £434.13 billion in 2019.

Oscillators for Taylor Wimpey such as Relative Strength Index (14)(60.09),  Stochastic %K (14, 3, 3)(75.71),  Commodity Channel Index (20)(158.18), Average Directional Index (14)(11.07) and Awesome Oscillator(5.24) are neutral. Moving averages such as Exponential Moving Average (10)(160.52), Simple Moving Average (10)(160.05),  Exponential Moving Average (20)( 158.91 ), Simple Moving Average (20)(158.47) and Exponential Moving Average (30)(158.35) are indicating a buy action.

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Recent Developments

Taylor Wimpey is a well-known homebuilder in the UK, which added 9799 completions last year, achieving a customer satisfaction rate of 92%. The company has also agreed on terms on land purchases worth £1.3 billion last year, which represents 22,600 plots. The shares had a good run last year, rising by 24%. The company is still experiencing robust demand from customers with a sales rate of 0.91 homes per outlet per week in the second half of its financial year.

Following UK prime minister Boris Johnson’s announcement of lockdown measures” in response to the COVID-19 pandemic, Taylor Wimpey shut all its sites and sales centres. While all its show homes had been closed during the lockdown, its total orders grew by 200 during the shutdown to reach 10,880 homes, up from 10,291 in the order book a year ago.

Taylor Wimpey has added nearly 5,500 plots to its short-term landbank during H2, bringing the total to approximately 84,000 despite facing stiff competition. The company continues to target 17,000 to 18,000 competitions per year supported by a £2.8 billion order book.

Should You Buy TW Shares?

Fresh housing data revealed that strong trading conditions remain for housebuilding stocks like Taylor Wimpey. Housebuyer activity is particularly high due to a combination of low-interest rates, massive competition in the mortgage market and financial support from Help to Buy. The company has continued hiking its profits forecasts in recent months in light of this bright industry outlook.

However, there are significant risks as well. Following stamp duty being restored by the company Concerns over the strength of the housing market have grown. According to HMRC data, as people’s tax liabilities rose in October, home sales more than halved month-on-month. This presents a perfect opportunity for people to increase holdings in Taylor Wimpey. Taylor Wimpey is currently trading at 9 times forecast earnings which is cheaper than rivals Permsimmon and Barrat. It has a forecast yield that is 5.4% lower than its peers. The shares are only higher by 5% compared to 5 years ago.

Investors looking to invest in this sector are in danger of getting impacted by higher interest rates. Property rates are also a factor, as it’s going to be more expensive for many to buy a home if stamp duty holiday and related assistance measures are removed. With average selling price declining, it will negatively impact Taylor Wimpey’s revenue despite having a solid order book.

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