Broker snap: Improving margins at Barratt

12th Jan 2011 10:59

Financial services firm Matrix places Britain's largest housebuilder Barratt Developments in its 'add' category as the group reported trading in line and recovering margins.The broker notes that net asset value per share (209p estimated for 2011) remains a primary driver of value for the group, and "with the level of operating margin now recovering, there should be some growth in this measure in the current financial year."The group reported a 6% improvement in average sales prices to £176,000 in the half year to date, but this was due to product mix rather than house-price inflation, says analyst Simon Brown."The cheaper land acquired over the last 18 months should start to influence the margin achieved on unit sales at an increasing rate as the fiscal year progresses," says Brown. New land acquired is reported to be margin enhancing to the tune of up to 10 percentage points.A target price of 105p and 'add' rating is confirmed.