Financial Trading Blog
Stock of the day 02/09/2016 – Barratt Developments PLC
It’s safe to say that the housing sector, market-wise at least, is not in a good place. While its components aren’t lingering at the lows struck in the immediate aftermath of the Brexit result neither have they recovered all of their losses, causing sector-leader Berkeley Group to be booted out of the FTSE 100 in the latest reshuffle. Barratt Developments is no different; a gradual decline across the first half of 2016 had still kept the stock flirting with £6, only for it to plunge to £3.26 as Britain chose to leave the EU. The company did admittedly have a strong August, and now sits at a current trading price of £4.89 (IT-Finance.com, 02/09/2016).
(Source: IT-Finance.com 02/09/2016)
Back in July Barratt addressed both the Brexit and its full year figures with its latest trading statement. The company claimed it expects its annual profits to have risen around 20% to £680 million, in part thanks to a 5.3% increase in competitions to 17,319. In regards to the referendum CEO David Thomas trotted out the same line as most companies at the time, stating that it was ‘too early to say what the impact of the uncertainty facing the UK economy will be’ while reassuring investors that the company remains ‘confident in the positive fundamentals’ of both the business specifically and the sector in general.
So, with its full year figures next Wednesday Barratt has the double pressure of matching those pre-tax profit estimates while providing investors with a slightly more substantial comment on the post-Brexit landscape. The latter point will likely be the one that dominates headlines, for though we are only just over 3 months on from the referendum that should have been enough time for Barratt to identify any slowdown in demand.
Barratt Developments PLC has a consensus rating of ‘Hold’ alongside an average target price of £5.40.
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