JP Morgan Cazenove is broadly positive on the building sector, which it says is trading below its long-term average.
It highlighted Persimmon (LON:PSN), Redrow (LON:RDW) and Bellway (LON:BWY) as its top picks.
In a note to clients, it also upgraded Taylor Wimpey (LON:TW.) to ‘overweight’, pointing out it has the “highest upside to consensus”.
Barratt Developments, meanwhile, was cut to ‘neutral’ by the bank’s analysts, after its recent “good performance”.
The stock has advanced 58% since hitting its low at the end of October.
In a companion note, JPMC assessed the potential financial impact of government intervention in the wake of the Grenfell tragedy on issues around cladding.
The bank reckons the proposed £2bn levy would likely result in a 2-4% additional tax.
“While we are still awaiting further details, we note that this is partly discounted already and unlikely to be a major concern.