Taylor Wimpey: Relief From Scorching Build Cost Inflation in Sight in Late 2023; Shares Appealing

Taylor Wimpey’s third-quarter trading statement provided us with little surprise, with the no-moat homebuilder reconfirming its subdued home completion guidance for 2023 amid challenging housing market conditions. Nonetheless, Taylor Wimpey provided a pleasing update regarding build cost inflation, which remains on a solid downward trajectory in the third quarter. With build costs cooling a little quicker in late 2023 than we’d previously credited, we’ve nudged up our full-year operating profit forecast by 3% to GBP 466 million. Our revised forecast sits near the top end of Taylor Wimpey’s reaffirmed 2023 operating profit guidance range of GBP 440 million-GBP 470 million. Taylor Wimpey shares remain materially undervalued in our view, trading at a 38% discount to our unchanged GBX 190 fair value estimate.