Source: Sharecast
Berenberg said FY25 has proven to be "a more challenging than expected year" for Barratt Redrow, with housing market headwinds persisting and, although it delivered an FY25 result in line with expectations, the impact was felt on reduced expectations for FY26.
The German bank pointed out that Barratt Redrow said it had seen "some improvement" in the mortgage market, but acknowledged that underlying private sales activity "has remained sensitive to consumer caution". On its conference call, Barratt Redrow said price growth was below 1%, while build-cost inflation was flat in FY25 and was expected to rise to 1-2% in FY26.
However, with "a robust balance sheet" and further synergies to be garnered from the Redrow integration, Berenberg thinks that the group remains well-positioned for when "a more favourable market environment" emerges.
Berenberg, which reiterated its 'hold' rating on the stock, also noted that Barratt Redrow trades on 12x earnings per share and 0.8x tangible net asset values.
Reporting by Iain Gilbert at Sharecast.com