Cannacord ups target on Barratt Developments, sees upside to earnings

7th Feb 2019 15:21

(Sharecast News) - Analysts at Canaccord Genuity raised their target price for shares on Barratt Developments following the company's latest six-month financials.In a research note sent to clients, the Canadian broker's Aynslet Lammin labeled the homebuilder's results "reassuring" and said the firm had relatively more earnings momentum upside, given existing room to 'beef-up' its margins and its target for volume growth of 3%-5% per year."The interim results were reassuring given the improvement seen in underlying margins from recent land buying and the benefits of the new house types," he said."Clearly macro risks remain given the political backdrop but it was reassuring to hear that 2019 had so far seen a reassuring sales rate as we enter the Spring selling season."Lammin also hailed management's decision to extend its special dividend commitment of £175.0m for another year, to fiscal year 2020.On Thursday, Barratt posted profits before tax of £408.0m, which was "well ahead" of expectations for profits of between £360.0-£365.0m. He also described the balance sheet as "good" and highlighted the outfit's reduced exposure to Central London stock.On the downside, he conceded that the sector had seen a sharp bounce recently, going on to say that he remained "cautious" on the macroeconomic front.Lammin upped his target price for the shares from 570p to 600p while reiterating his 'buy' recommendation.He also tweaked his estimate for the company's profits before tax in 2019 higher to £887.0m.