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Liberum downgrades Barratt and Bovis on valuation

By Michele Maatouk

Date: Monday 11 Feb 2019

Liberum downgrades Barratt and Bovis on valuation

(Sharecast News) - Liberum cut its stance on housebuilders Bovis Homes and Barratt Developments on Monday on valuation and performance grounds, as it took a look at the broader sector.
The brokerage said the risk/reward has become less favourable following a more than 20% bounce in the shares from their December lows and it was now looking to lock in some profit.

"We estimated that the worst case of a hard Brexit had been discounted in December, but we no longer think this is the case. We take our sector stance to a more balanced position by cutting Bovis and Barratt from 'buy' to 'hold', on valuation and performance grounds.

"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."

Persimmon, Bellway and MJ Gleeson remain Liberum's top picks among the large, mid and small caps. It also said sit sees good upside in Galliford Try and Crest Nicholson given attractive valuations and improvement plans in place, and some value in Redrow.

Liberum lifted its price target on Barratt to 540p from 500p and on Bovis to 950p from 910p.

At 1545 GMT, Bovis shares were up 0.2% to 1,029.50p and Barratt shares were 1.9% higher at 573.40p.

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