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Persimmon Share Price Analysis After the Barclays Downgrade

The Persimmon share price has struggled in the past few sessions as investors reflect on the UK housing market and a downgrade by Barclays. It is trading at 2,770p, which is about 2.65% below the highest level last week.

The UK housing market is doing relatively well, helped by the rising demand by local and foreign buyers. The supply shortage has also helped to push home prices higher.

Recent data shows that home prices continued doing well in November. Last week, data by the Nationwide Society showed that the average home price jumped by 0.9% in November and by 10% from a year earlier. This means that the average home price in the country has risen to more than 258k pounds.

And today, data by Halifax showed that home prices rose by 1% in November leading to a year-on-year gain of about 10%. This increase was better than the median estimate of 9%. Housebuying has been the busiest since 2006, just before the financial crisis.

Therefore, homebuilders like Persimmon and Taylor Wimpey are benefiting from these trends. However, their share prices have lagged because analysts expect that the industry will start to slow in 2021. At the same time, the companies are seeing additional costs, which will likely hurt their margins.

The Persimmon stock price has also lagged after Barclays analysts slashed their outlook for the stock to 2,500p from the previous 3,000p. The analysts noted that:

“Forward order books provide short-term protection to volumes, however, we see particular demand risks for first-time buyers, where rising interest rates have a more pronounced impact on mortgage costs.”

Persimmon share price forecast

The four-hour chart shows that the PSN share price has been under pressure in the past few days. A closer look shows that the stock has formed an ascending channel that is shown in black. The current price is slightly above the lower side of this channel. It is also slightly along the 61.8% Fibonacci retracement level. 

Therefore, the stock will likely resume the bullish trend as bulls target the upper side of the channel at about 2,850p. This view will be invalidated if the price falls below 2,740p.

Persimmon Share price