Can Barratt Developments find the materials for a rebuild in next Wednesday’s full year results?
It hasn’t been a great year to be in the UK house-building sector, with falling prices in London, ongoing Brexit concerns and the run-up to August’s interest rate hike from the Bank of England creating a toxic trading environment.
Barratt has been one of the worst hit. Opening at £6.56, the stock had slumped to £5.26 near the end of March. It managed to rally back to £5.89 by mid-June, only for the company to dramatically tumble as summer went on, finding itself at a 17 month nadir of £4.80 by mid-July. Since then things have picked up once again, with Barratt Developments PLC now at a current trading price of £5.42.
The thing that helped the stock rebound from those July lows was the firm’s pre-close trading update, suggesting the firm’s market problems are more sector-wide than company-specific. There Barratt was upbeat, announcing its highest levels of total competitions – 17,579 to be precise – in a decade, with a 5% increase to the average selling price to £289,000 and ‘better than expected’ year-end trading in Central London. Most importantly, the company said its pre-tax profit would come in around £835 million, just over a 9% jump on 2017’s £765.1 million and well ahead of analysts’ forecasts of £812 million.
Given that the company put most of the big numbers out there in July, it’ll be interesting to see how much movement Wednesday’s annual release creates. That’ll likely be decided by how accurate Barratt’s pre-tax profit prediction was, as well as any guidance for its present financial year.
Barratt Developments PLC (LON:BDEV) has a consensus rating of ‘Buy’ alongside an average target price of £6.54.
Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved."