Financial Trading Blog
Stock of the day 05/11/2015 – Barratt Developments PLC
Can the company nip its nascent decline in the bud with its interim statement next Wednesday?
Like the rest of its house-building peers, Barratt Developments (the largest company in the sector) has seen moments of explosive growth combined with sustained periods of upwards advancement to hit near 8-year highs. Starting the year at £4.68, by the start of July the stock had climbed to £6.40, though since then Barratt has struggled to match the kind of gains it made in the first half of the year.
(Source: IT-Finance.com 05/11/2015)
However, it deftly managed the market chaos of August, with a brief dip below £6 quickly overcome a few days later. More importantly, its start of September full year results allowed it to maintain its post-£6.40 levels. Those results contained a 19% increase in revenue to £3.8 billion alongside a huge jump in pre-tax profits from £391 million to £566 million year-on-year. That growth was prompted by the fact that Barratt completed its largest number of homes since the crisis in 2008, creating a nice bit of symmetry as its full figures helped send the company to a fresh peak of £6.73, its highest price since 2007.
After falling away from that high Barratt spent most of October trading in the £6.40 to £6.50 bracket that was its home for most of the third quarter (barring that aforementioned August dip). However, in the past week the stock has begun to fall; a 3% tumble on the 29th October took it to £6.17, before an update from Liberum Capital on the 3rd November helped send it to a current trading price of £5.78 (IT-Finance.com, 05/11/2015), on the way hitting a 6 and a half month low of £5.68.
That Liberum note labelled the ‘largest housebuilders’ valuations’ as ‘too optimistic’, especially with the house price inflation that has been such a boon to the sector expected to come under pressure from a ‘more vigilant regulator’. Yet so long as there is such an imbalance between home supply and demand signs of a continued strong performance in revenue and actual house-building could attract those investors that had abandoned Barratt back to the stock following its interim statement.
Barratt Developments has a consensus rating of ‘Hold’ with an average target price of £5.90.
It's easy to open an account
- Fill in our simple online application form
- Fund your account
- Start trading the global markets instantly!
SEARCH FOR AN ARTICLE:
Enter a keyword and search for all relevant articlesMARKET ANALYSIS
RECENT POSTS
DISCLAIMER
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investors lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. For professional clients, spread betting and CFD trading can also result in losses larger than your initial stake or deposit.
Spreadex Ltd is authorised and regulated by the Financial Conduct Authority, provides an execution only service and does not provide advice in any way. Nothing within this update should be deemed to constitute the provision of investment advice, recommendations, any other professional advice in any way, or a record of our trading prices. This update does not constitute or form part of an offer of, or solicitation for a transaction in any financial instrument, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore. Any persons placing trades based on their interpretation of the comments or information within this update does so entirely at their own risk.
No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained within this update by Spreadex Ltd or any of its employees and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained within this update.
The information contained within this update is the intellectual property of Spreadex Ltd and is protected by UK and International copyright laws. All rights reserved. Users may however freely download, distribute and reproduce extracts of the contents, subject always to accrediting Spreadex Ltd as the source and providing a hyperlink to machibet77.com.
