Financial Trading Blog

Stock of the day 18/02/2016 – Barratt Developments PLC



With the stock’s stellar 2015 trailing off as the year came to a close can Barratt Developments remind investors why they were so excited about the housebuilder when it reveals its half year figures next Wednesday?


For a while in 2015 things were looking so good for Barratt Developments; following a fantastic full year report at the start of September, which included a 19% surge in revenue to £3.8 billion and a 45% jump in pre-tax profits to £566 million year-on-year (thanks to Barratt completing its highest number of homes since the financial crisis), the stock swelled to an effective 8 year high of £6.74 by the end of the month.

Barratt Developments Plc Chart February 2016
(Source: IT-Finance.com 18/02/2016)

Yet things began to turn as the company entered October; by the middle of the month Barratt had slipped to £6.11 thanks to fears over the valuation of the entire housebuilding sector. And whilst the company managed to bounce back to £6.50 as October month wrapped up, a downgraded rating from JP Morgan and a gloomy note on the entire sector from Liberum soon saw its decline resume, leading to a 6 month low of £5.49 by the middle of November. The stock did manage to pick up as the year came to an end, however, closing out 2015 at £6.29.

Of course then 2016 began, and with it came the price-eroding fluctuations that have plagued companies market-wide. Barratt Developments was in no way immune, and by the middle of February had fallen all the way to £5.44, a 9 month nadir. It now sits at a current trading price of £5.74 (IT-Finance.com, 18/02/2016).

What is interesting, however, is that in the midst of that fall Barratt Developments produced another impressive update, its mid-January statement revealing a 9.4% increase in half year completions, aided by the government’s ‘Help to Buy’ schemes, with the added sweetener of an 11% rise in average selling prices to £254,000. There was one minor niggle in the middle of the report, however; Barratt started fewer new developments last year than it did in 2014, partially due to a shortage of skilled labour. Regardless, it shows that power of 2016’s bearishness that Barratt could post such a strong statement and still find itself hitting 9 month lows.

Barratt Developments PLC has a consensus rating of ‘Hold’ with an average target price of £6.39.


MARKET 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 www.machibet77.com.