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Barratt in favour at Deutsche Bank as analysts observe “post-election rebound” in housing market

Deutsche said a release of pent-up demand in the housing market will help housebuilders achieve list prices on their projects, bolstering margins across the sector

Barratt Developments - Barratt in favour at Deutsche Bank as analysts observe “post-election rebound” in housing market

Barratt Developments PLC (LON:BDEV) has been upgraded to ‘buy’ from ‘hold’ by analysts at Deutsche Bank as the financier turned its attention to the UK’s housebuilders amid what it says is a “post-election rebound in buyer confidence” in the housing market.

The FTSE 100 construction group, which also had its target price hiked to 807p from 648p, was “likely the best exception” to margin pressure that had occurred last year, Deutsche said, although they expected that going forward a release of pent-up demand will help housebuilders achieve list prices on their projects, bolstering margins across the sector.

READ: Housebuilders enjoy more upgrades as Tory election sets foundation for more growth

The bank also expected “heightened interest” in the government’s Help to Buy scheme form non-first time buyers before their access expires at the end of 2020.

Barratt’s upgrade from Deutsche stands in stark contrast to a sector assessment made by Bank of America Merrill Lynch on Monday, which saw the company downgraded to ‘neutral’ from ‘buy’.

Another firm receiving an upgrade was McCarthy & Stone PLC (LON:MCS), which was upped to ‘buy’ from ‘hold and had its target price increased to 154p from 137p.

Taylor Wimpey PLC (LON:TW.) also received a target price hike from the bank to 230p from 187p in the wake of a 2019 trading statement in which it reported a 5% rise in housing completions and a 2% increase in selling prices for the past year.

READ: Taylor Wimpey welcomes “political stability” and expects similar growth in 2020

The group had also ended the year with an order book valued at £2.2bn and a net cash balance standing at £546mln, down 15% over the year but still ahead of expectations.

Meanwhile, Crest Nicholson Holdings PLC (LON:CRST) was the only housebuilder to suffer a downgrade from Deutsche as it was knocked to ‘sell’ from ‘hold’, however its target price was raised to 371p from 368p.

In mid-morning trading on Tuesday, shares in Barratt and McCarthy, the two upgraded stocks, were 0.1% higher at 769.4p and up 1.7% at 144.4p respectively.

Quick facts: Barratt Developments

Price: 416.3 GBX

LSE:BDEV
Market: LSE
Market Cap: £4.25 billion
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