Investing.com — Shares of Bellway (OTC:) (LON:) jumped on Tuesday after the company said that it anticipates constructing more homes in the 2025 financial year than in the previous period.
At 5:40 am (0940 GMT), Bellway was trading 6.8% higher at £3,260.
In an exchange filing on Tuesday, Bellway said the company is well positioned for increased volume output in the coming year, and if market conditions remain the same, it intends to build more homes.
“Bellway’s full year results were in line with expectations, but its outlook for the year ahead exceeded them,” said analysts from RBC Capital Markets in a note.
Despite a challenging year in 2024, marked by a 30% drop in completions to 7,654 homes, Bellway cited the combination of a stronger order book and the expected easing of mortgage rates as key factors supporting its outlook for 2025.
“The combination of these improving trading conditions and our strong outlet opening programme has generated a healthy increase in the year end order book. As a result, we are well-placed to deliver a material increase in volume output in financial year 2025,” the company said in a statement.
Bellway also reported early signs of increased activity in the land market, with head of terms agreed for 8,500 plots, up from 6,500 at the last update. The company remains particularly optimistic about its strategic land holdings, maintaining a positive outlook over a two-year horizon.
As affordability pressures ease and consumer demand picks up, Bellway aims to sustain a healthy forward order book to fuel this growth trajectory.
“With FY25 guidance suggesting consensus to be flat (in the company view) to slightly up (our view) and talk of >20% increase in volumes targeted on a two-year view giving similar trajectory for FY26, we believe investors will start to feel comfortable to discuss the upside case for earnings,” said analysts from Jefferies in a note.
Jefferies said the company anticipates limited changes to FY25 consensus estimates, although they see potential for a low-single-digit percentage upside based on VA consensus.
This more positive outlook follows a year in which the housebuilder saw a steep decline in sales due to high borrowing costs and inflation.
However, with expectations of further rate cuts and a stable housing market, Bellway is well-positioned to meet its volume targets, providing a brighter forecast for its stakeholders.