Barratt Developments looked interesting this morning. It announced its interim results yesterday and the lead up to the announcement just goes to show that you need to be wary of hype surrounding shares and look at the bigger picture. It saw three differing recommendations this morning. Panmure Gordon has posted a buy and even moved its target from 172p to 180p. Now this seems optimistic and I’m sure this is based on investors getting in on the housing market when the recovery has been confirmed. The other two recommendations from Invstec and Shore Capital are ‘Hold’ and ‘Sell’ respectively. These recommendations come on the back of Barrett saying yesterday that total completions for the half year were 5,053 compared to 6,905 a year ago and revenues amounted to £872.4 million, down from £1.26 billion in 2008. It is true that the share price does tend to reflect future events and therefore despite the company posting a 27% increase in book orders and a rise in the prices of houses sold there is still stormy waters ahead for the housing market. Kate Barker, a member of the Monetary Policy Committee, and many other analysts have said that the rally we have seen over the past 12 months cannot continue. Evidence of this came the same day when the British Bankers’ Association published figures outlining that mortgage approvals fell to an eighth month low in January. This was partly due to the end of the stamp duty holiday. What is certain is that there is going to be a period of downturn this year as the government cuts back on public spending. This is going to mean cuts in employment and also increasing employment uncertainty. With these conditions in place the purchase of big ticket items such as new homes I feel is going to be put on the back burner. I would put Barret into the speculative buy basket. It is not paying a dividend this year but it could be a good buy considering it’s share price is well undervalued at the moment. I also came across a good analysis of BP today.
http://www.istockanalyst.com/article/viewarticle/articleid/3893668
Broker Recommendations Today
Company | Old Target (current price) | New Target | Broker (s) |
Rothbone Brothers | _ | buy | Daniel Stewart |
Barratt Developments | 170p | Hold Sell 180p | Investec Shore Capital Panmure Gordon |
Melrose Resources | _ | buy | Brewin Dolphin |
Logica | _ | buy Sell | Panmure Gordon Astaire Sec |
St James's Place | _ | buy | Panmure Gordon |
Aegis | _ | buy | Panmure Gordon |
T Clarke | _ | 147p | Panmure Gordon |
Premier Foods | _ | 45p | Panmure Gordon |
| Dominoes Pizza | _ | buy | Seymour Pierce |
| BHP | _ | Buy | ING Barings |
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