Barratt Share Price Gains on Dividend Hopes

on Sep 9, 2013

iNVEZZ, Monday, September 9th: Shares in Barratt Developments surged this morning on expectations that Britain’s biggest housebuilder by volume will declare its first dividend since 2008, reflecting recovery of the country’s housing market aided by the government’s Funding for Lending and Help to Buy schemes.

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As The Sunday Times has reported, analysts expect Barratt to report this week a 70 percent jump in annual pre-tax profits to £188 million. In July, Barratt forecast 2013 profit before tax of £192 million, while analysts were expecting profits in the range between £170 to £191 million.

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Analysts and investors will closely watch Barratt’s results for the year ended in June because the figures will represent the most-up-to date snapshot of Britain’s land deals and housing starts. The company said in July that its sales rate rose by 17.9 percent year-on-year in the second half of its fiscal year.

**Indication of housing market prospects**
With Barratts operating throughout the country – unlike many of its peers that have their activities focused on London and the south-east – its annual results will be indicative of the prospects for the UK’s wider housing market. House prices have increased and with them – the market capitilisation of listed housebuilders.

The company has considerably improved its debt position since the gloomy days of 2008 when it suspended dividends and its share price plummeted 95 percent. Since then, Barratt has cut its debt balance to just £30 million and its shares are trading at around a third of their pre-crisis high. Barratt’s share price today was up 2.89 percent at 323.60p as of 10:20 BST.

“Even a modest payout will be a welcome reward for shareholders who stumped up £720m for the 2010 rights issue it used to patch up its balance sheet,” The Sunday Times has commented in its article.
Much of the credit for the company’s brightening fortunes should go to the Funding for Lending and Help to Buy schemes, which last month propelled UK mortgage approvals to their highest levels since 2008. Barratt’s sales rate rose by 34.7 percent since the start of Help to Buy, the company said back in July. Total forward sales were up 53.6 percent to £829.7 million pounds at the end of June.
Now, with its improved balance sheet and ‘rebalanced land bank’, Barratt is in a better position than most of its peers to weather a possible rate hike by the Bank of England that would in effect dampen prospects for builders, The Sunday Times has noted.
**Analysts on Barratt**
Last month, Deutsche Bank reiterated their buy rating on Barratt shares and gave the stock a price target of 365.00p. The shares have a one-year low of 156.00p and a one-year high of 359.80p.
!m[Shareholders Await First Barratt Dividend since 2008](/uploads/story/5343/thumbs/pic1_inline.jpg)
Analysts at Bank of America Corp. in July raised their price target on Barratt shares from 325.00p to 365.00p and assigned a neutral rating on the stock. As of August 29 one research analyst has rated the stock with a sell rating, eight have issued a hold rating and six have issued a buy rating. Barratt Developments had a consensus rating of Hold and an average price target of 341.22p.
**As of 10:56 BST buy Barratt shares at 325.60p.**
**As of 10:56 BST sell Barratt shares at 325.10p.**

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