A couple of dips aside, Berkeley was almost permanently on the up and up in 2017. This run took the stock all the way from an opening price of £28.22 to a record peak of £42.48 by December’s close, a robust 50% increase year-on-year.
Yet the early signs suggest Berkeley isn’t going to have quite such an easy time of it this time out. The fear of rising interest rates, alongside a slowdown in the London housing market, has seen the stock on the back foot, with it at one point hitting £37 near the start of February. It’s bounced back a tad since then, but not by much, with Berkeley Group Holdings PLC now at a current trading price of £38.39.
While there are concerns surrounding the wider sector, last December’s half year results suggest a company in rude health. Interim revenue rose 13.7% to £1.6 billion, a figure bested by the whopping 35.8% surge in pre-tax profit to £533.3 billion. That latter number also prompted Berkeley to up its profit guidance for the 5 year period between 2016 and 2021, with the firm now forecasting a haul of £3.3 billion against the previously targeted £3 billion.
However, there was a note of warning. CEO Rob Perrins stated that the company’s ‘big concern’ is that transaction levels in London fell 18%, while the chief exec also argued that the company’s land holdings were slightly lower year-on-year because they had been ‘more cautious because of the macroeconomic environment’.
As for Friday’s update, in light of the recent reports that house prices in parts of London dropped as much as 15% in the last 12 months, investors are going to be especially interested how trading has been holding up in the capital since the start of the New Year.
The Berkeley Group Holdings plc (LON:BKGH) has a consensus rating of ‘Hold’ alongside an average target price of £38.27.
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