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2018-10-09 17:11 CEST
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Goldman Sachs includes AEDAS Homes in its Pan European Conviction Buy List and sees growth potential of almost 50%

  • The entity has revised the target share price upwards to €40.20 following the developer's results presentation.
  • The experts highlight the company's confirmation of its business plan up through 2023, as well as an increase in the expected gross margin thanks to the 1,862 properties currently under construction or completed.

Goldman Sachs has affirmed its support for AEDAS Homes and updated its buy recommendation on the value of the residential developer following the presentation of the company's first half of the year results. Thus, the investment bank is reiterating its recommendation to purchase shares in the company, seeing a growth potential of 47.7% in the share price of €27.22 (trading closed yesterday at €25.42). The company's analysts have also included AEDAS Homes in its special Pan European Conviction Buy List.

Goldman Sachs has accordingly revised its target price for AEDAS Homes shares upwards to €40.20, which is an increase of almost one Euro since its last update in May (€39.30). Likewise, they predict that the earnings per share (EPS) for 2019 will be €1.20, while in 2020 it will reach €2.88.

Furthermore, the entity pointed out that in its latest results, AEDAS Homes confirmed its business plan up through 2023, noting that construction is complete on all properties slated for delivery in 2018, construction is well underway for all 2019 deliveries, and construction permits for more than 70% of its 2020 deliveries have already been secured. At the sector level, Goldman Sachs focused on the issue of construction cost inflation, noting that these costs have been offset by house price appreciation fuelled by strong demand, and underscored an increase in the developer's expected gross margin on the 1,862 homes it currently has under construction or completed, as well as the fact that it is working with strategic partners to encourage economies of scale.

Lastly, Goldman Sachs highlighted AEDAS Homes' new line of business, which focuses on developing homes offsite by using industrialized construction processes that will halve delivery times, noting that this new business will contribute another 100 properties to the 1,055 homes slated for delivery next year.