Analysts are 'scratching their heads' over why no one is buying this bargain housing stock

Some analysts are confused as to why people are not buying shares in Bovis Homes despite the massive UK house builder reporting stellar results for the first half of the year, a healthy orderbook, and a positive outlook.

Analysts at Jefferies Anthony Codling and Sam Cullen said in a note to clients this morning that "we are leaving our estimates unchanged and scratching our heads to understand why the shares are trading below book value."

"With a clean gross margin approaching the Group's hurdle rate, all profits are currently in for free in our view. We recommend that investors buy the shares," they added.

This is not the first time Jefferies analysts have pointed out that the Bovis stock is a bargain. At the beginning of July, when Bovis Homes was trading over 30% lower since Britain's Brexit vote on June 23, Codling and Cullen said buying stock in the group at the moment is "akin to buying £5 notes for £4."

Bovis reported on Monday that it had achieved 90% of planned home sales for 2016 aas at 12 August. For the six months ending June 30 2016, revenue was also up 18% at £412.8 million ($533.8 million) while housing gross profit was up 19% at £100.3 million.

However, Bovis shares are still 17% down since Britain voted to leave the European Union in the referendum on June 23:

The uncertainty over where house prices are going to go following the EU referendum result could be weighing on investors' confidence in buying the stock.

Jefferies points out:

"The fortunes of Bovis are linked to the underlying UK housing market, therefore, significant reductions in UK house prices, mortgage availability or material changes to the supply chain may lead us to reduce our estimates."

Bovis said that average sales price of homes surged by 14% to £254,500 in the first half of this year, when compared to the first half of 2015. However, this was before Britain voted for Brexit. Now uncertainty over what the effects of the Brexit could be, is weighing on housing market sentiment.

On Monday, property website Rightmove said house prices are falling across England and Wales because of Brexit concerns.