The analysts say the firm, which operates mainly in the North-east and Scotland, is an ideal target for giants such as Westbury and Bryant, which are keen to expand their geographical spread.
Speculation has surrounded Tay Homes’ future since last spring, when shareholder and rival Country & Metropolitan showed interest in bidding for it.
One analyst said that major housebuilders such as Westbury and Bryant should be looking at Tay, which has a market capitalisation of just over £20m.
He added: “Given the urgent need for new plots in the industry, I think there is a real opportunity there for someone to pick up Tay.”
The analyst pointed to the present undervalued state of Tay on the stock market, the 68p share price being 70% of its value.
He said: “If you compare the net asset per share price to actual price, it’s ludicrous. No one has picked up that you can buy Tay’s land very cheaply.”
The analyst added that the housebuilder, presently undergoing a reorganisation following a £12.9m loss last year, was entering a crucial period in the coming months. He said: “The next three to six months are critical for the existing management.”
The next three to six months are critical for the existing management
Tay Homes finance director Stephen Evans was philosophical about the firm’s future, saying the management was concentrating on turning around the firm’s fortunes.
He said: “We are where we are. There’s no point in throwing ourselves in the river over this.”
Evans said the firm, which posted a pre-tax profit of £1.6m for the year to 30 June, was ahead of schedule in terms of refocusing the business.
The reorganisation has seen a slip in turnover, from £122m in 1999 to £87.5m in 2000, as well as controlling overheads, which the group aims to be 5% of turnover.
Evans said: “Things are coming together a bit quicker than we expected. The question mark is what the market will be like over the next 12 months and whether the cooling in the South-east will spread to the North.”
Chief executive Bill Bannister said problems inherited by the new management team, including an emphasis on volume rather than margins, were being overcome.
The new board, which includes Bannister and chairman John Maunders, was brought in following a failed bid for Tay by housebuilder Sunley last year.