Broker snap: JPMorgan upgrades Persimmon and Barratt Developments

30th Sep 2013 11:27

Housebuilding peers Persimmon and Barratt Developments were making gains on Monday morning after JPMorgan Cazenove upgraded its ratings for both stocks to 'overweight'.The wider sector was given a lift after the government announced this weekend that it will launch the second phase of the 'Help to Buy' scheme next week, two months earlier than originally anticipated.JPMorgan Cazenove said that the sector has underperformed the market by around 11% in the third quarter due to worries over the scale of upside and longer-term sustainability of earnings on the back of concerns over eventual interest-rate increases, cost inflation and speculation that Help to Buy could be withdrawn.However, the bank said that these concerns are "misplaced". "Despite taking what we view as a conservative stance on house price inflation, volume growth and cost inflation, our earnings per share estimates for 2014 and 2015 are around 25% ahead of Bloomberg consensus. We view the recent sell-off as a buying opportunity."JPMorgan Cazenove nevertheless has downgraded its rating for Bovis Homes on Monday to 'underweight'.BC