Broker snap: Barratt still a sell, says Panmure Gordon

23rd Sep 2009 11:00

The widely anticipated rights issue announced by housebuilder Barratt Developments will put the group on a more stable footing but Panmure Gordon still prefers Bovis and Bellway in this sector.The broker said it continues 'to prefer those housebuilders with cash positive balance sheets,' and rates Barratt shares a 'sell', with a target price of 145p, although this may be reviewed following the investor analyst meeting following the company's interim results.'Assuming that the group still has further write-downs to come in 2010 (Barratt has so far written-down assets on the assumption of 20% deflation in house prices compared to -27% across its peer group), the group's tangible NAV [net asset value] dilutes from the 415p reported today to 205p. If we assume that no further write-downs are forthcoming, the NAV would dilute to 220p,' the broker added.