Taylor Wimpey Share Price Forecast June 2021 – Time to Buy Shares?
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The housebuilding sector in the United Kingdom has been on the path of recovery since last November, coinciding with UK stocks starting their vaccine rebound. This creates an opportunity for housebuilders like Taylor Wimpey plc (LSE: TW). With a looming housing shortage in the market, many investors have remained bullish about the share price of Taylor Wimpey.
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Taylor Wimpey Shares – Technical Analysis
The financial statement of Taylor Wimpey plc reveals a market cap of £5.859 billion and a price-to-earnings ratio of 27.5170 (TTM). The company earned a revenue of £2.79 billion in 2020, with a profit margin of 7.78%. This is a sharp decrease from a revenue figure of £4.4 billion in 2019.
Examining the technical information of Taylor Wimpey plc reveals that Oscillators such as Ultimate Oscillator (7, 14, 28)(41.99), Bull Bear Power(−7.96) and Williams Percent Range (14)(−83.81) point towards being neutral. On the other hand, Exponential Moving Average (10)(163.88), Ichimoku Cloud Base Line (9, 26, 52, 26)(168.32) and other Moving averages point towards sell. Shares closed at £161.00 on June 25th, with a downtrend of -0.49%.
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Recent Developments
Taylor Wimpey shares have been up around 5.5% since the start of this year, but many o its competitors have seen double-digit growth. The company isn’t scheduled to provide us with any substantial financial news until the first half of August. The company has recently secured planning permission from South Lanarkshire Council, with plans to deliver 227 new homes at Jackton.
Taylor Wimpey’s revenue grew at around 5.7% CAGR from 2016 to 2019. The revenue fell by 36% this year, which has been challenging for all companies in the sector due to the Covid-19 pandemic. In addition to this, the UK government has rolled out several schemes to support the housebuilding sector, such as the Help to Buy, 95% mortgage guarantee scheme and others. All of this is good news for the sector and can be positive drivers for TW’s share price.
Should You Buy TW Shares?
UK house prices have increased up to 10.9% on the year to May which has a major contribution to the housebuilding sector’s recovery in early 2021. However, the long-term direction of this market cannot be ascertained at the moment, simply by looking at the short-term market reaction to the easing of lockdowns.
There are certain risks that investors need to consider while buying TW shares at the moment. The emergence of a new Covid-19 variant which is spreading in the UK could severely hamper the scheduled opening of the sector. House prices are bound to fall due to slowing economic growth, which can, in turn, will reduce the profits and cash flows of Taylor Wimpey. The ROI of the company’s huge investments in land acquisition and building houses could fail to meet expectations. The overall macro-environment is improving however, especially in the home building sector, Taylor Wimpey’s fundamentals are also good, which can serve well for investors in the long term.
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