Here’s Why Taylor Wimpey Share Price is Choking Today

Summary:

Taylor Wimpey share price has declined sharply today as investors react to the new layoffs. What will happen next for the big US housebuilder?

Tylor Wimpey share price is sinking today after the company announced major restructuring process. The shares are down by more than 2% becoming one of the worst-performers in the FTSE 100. Other builders like Persimmon and Barratt Developments are also reeling.

What happened: Taylor Wimpey (TW), one of the biggest homebuilders’ firm in the UK, announced that it will lay-off more than 100 people in the near term to save money. It expects these layoffs to save it about £15 million. Most of those affected will be managers and departmental heads. As a result, the firm will consolidate some of its operations.

But the housing sector is booming? To be clear, these layoffs are relatively small considering that Taylor Wimpey employs more than 6,000 people in the UK and Spain. But they are notable because the house market in the UK is relatively robust as evidenced by the surging mortgage approvals.

Also, TW recently announced better earnings and boosted its guidance. Most importantly, Taylor Wimpey, together with other builders have resumed dividend payouts.

However, the future of the real estate remains shaky, especially when government support ends. Indeed, data released today showed that construction output fell 7.5% in October.

So, what about Taylor Wimpey share price? The shares are trading at 156p. Analysts have mixed opinions about the stock. In recent note, those at JP Morgan lowered their targe to GBX 130 while those at Canaccord Genuity and Credit Suisse lowered to GBP 160 and GBP 154, respectively.

Taylor Wimpey technical outlook: On the daily chart below, we see that TW share price has been struggling recently. It has remained between 152p and 171p in the past two weeks. It is also slightly above the 38.2% Fibonacci retracement level. It is also above the 50-day and 25-day exponential moving averages. Therefore, in the near term, I suspect that the shares will remain inside this range. The levels to watch will be the support at 152p and resistance at 171p.