2017 has been quite the time of it for Bovis Homes Group(LON:BVS) (LON:BVS), with scandals and rebuffed takeover attempts defining much of its year. Not that you could really tell from its chart. Bar some wild movements between February and March the stock has largely followed the same trend as the rest of the housebuilding sector, climbing higher and higher to now sit at a current trading price, and effective 2 year peak, of £10.53.
That Bovis hasn’t been more greatly affected by its various issues reflects just how popular with investors the sector is right now. Back in February its annual report was tainted by the news that it was set to pay out £7 million to repair poorly constructed homes sold to customers. This capped a tumultuous period for Bovis, with a profit warning in December, the departure of CEO David Ritchie in early January and the subsequent reveal that the company had paid customers to move into uncompleted homes to meet sales targets.
To combat all this Bovis said it would be cutting production by 10% to 15% in 2017, in order to try and avoid the kind of target-chasing issues that soured its financial 2016. The company also appointed former Galliford Try (LON:GFRD) boss Greg Fitzgerald as CEO in April to replace the ousted Ritchie.
Yet its problems haven’t gone away since then. In May it announced it took a £2.8 billion hit in the aftermath of the rejected takeover bids from Galliford Try and Redrow (LON:RDW), the money having been spent on advisory services dealing with the offers. And July’s statement showed that the house build quality scandal was still unresolved, with the firm forced to set aside another £3.5 million for fixes, taking the total to £10.5 million.
One the key things to look out for in terms of next Thursday’s half year statement, then, is whether Bovis has had to put aside any more money for house-fixes. Investors will also want to hear Fitzgerald’s new strategy, alongside an update on its annual pre-tax profit forecasts, which currently point to a 20%-ish plunge year-on-year.
Bovis Homes Group has a consensus rating of ‘Hold’ alongside an average target price of £9.58.
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