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Barratt and Bovis knocked to ‘Hold’ by Liberum on valuation grounds, says no-deal Brexit discounting “no longer the case”

In a note on UK housebuilders, analysts said the shares had risen around 20% from lows in December, and now the risk/reward had become “less favourable”

House building
The broker added that despite estimating in December that the worst case of a hard Brexit had been discounted, this was no longer the case

Barratt Developments PLC (LON:BDEV) and Bovis Homes Group PLC (LON:BVS) have been downgraded to ‘Hold’ from ‘Buy’ by broker Liberum on valuation ground after recent share price bounces and a row back on the discounted risk of a hard Brexit.

In a note on UK housebuilders, analysts said the shares had risen around 20% from lows in December, and now the risk/reward had become “less favourable”.

READ: Barratt Developments to pay special dividends in 2019 and 2020 as first-half profit jumps

They added that despite estimating in December that the worst case of a hard Brexit had been discounted, they no longer thought that this was the case.

“Trading is proving resilient for listed builders in January, although we detect more caution among housebuilders more generally. The timing and transition arrangements for Brexit remain the key drivers of the short term outlook.”

Despite the downgrades, both Barratt and Bovis had their target prices raised to 540p from 500p and to 950p from 910p respectively.

In mid-morning trading Monday, Barratt shares were up 0.7% at 567p while Bovis shares were down 0.6% at 1,022p.

Quick facts: Barratt Developments

Price: 643.4 GBX

LSE:BDEV
Market: LSE
Market Cap: £6.55 billion
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