Financial Trading Blog
Stock of the day 15/03/2016 – The Berkeley Group Holdings PLC
Teasing £38 in mid-December Berkeley eventually started 2016 at £36.45, before quickly falling to £34.13 by the end of the first week of the New Year. The stock initially managed to weather the torrid trading that has defined the early months of 2016 fairly well, rising back to £37 by the middle of January before settling in around £35.50 for the rest of the month.
Things got ugly at the start of February, however, with Berkeley plunging nearly 20%, dipping under £30 for the first time since the previous November as the global sell-off accelerated. Briefly bouncing back above £34 the stock soon resumed its slide as Boris Johnson announced he would be backing a Brexit ahead of June’s referendum, causing Berkeley to plunge back below £32.
(Source: IT-Finance.com 15/03/2016)
Having already warned last year that a Brexit would reduce the need for housing in London, Berkeley’s violent reaction to February’s floppy-haired Boris-bomb is understandable, and could spell trouble for the company as the in/out debate only intensifies in aggression as the referendum drags closer.
Despite a brief rebound at the end of February as its housing sector peers posted a strong set of results Berkeley’s decline soon resumed at the start of March, the company ignoring the wider recovery to hit a 10-ish month low of £29.20. The stock now sits at a current trading price of £30.90 (IT-Finance.com, 15/03/2016).
Though Peel Hunt recently stated that the company’s ‘long term fundamentals...remain intact’, with an ‘impressive track record [of] adding value consistently to the sites it takes on’, meaning it could still well see a positive update on Friday, whether that can counter the macro-movements (including the impending changes to buy-to-let taxation) currently having such a negative impact on Berkeley’s price is unclear.
The Berkeley Group Holdings PLC has a consensus rating of ‘Hold’ with an average target price of £37.28.
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