UBS Upgrades Barratt Developments Plc. (LON::LN) to Buy: Potential for 29% Upside
On Monday, UBS upgraded shares of Barratt Developments Plc. (LON::LN) (OTC: BTDPY) from Neutral to Buy, setting a new price target of GBP6.30. This upgrade comes as Barratt's stock is undervalued compared to its peers, trading at 1.1 times its price to tangible net asset value (P/TNAV) while the sector average is 1.3 times.
The recent acquisition of Redrow has positioned Barratt as the largest homebuilder in the UK, with 18,000 completions and nearly £6 billion in pro forma revenues forecasted for 2024. Despite recent underperformance, the integration benefits and increased site counts are expected to improve Barratt's financial metrics in the coming years.
The new price target implies a 29% upside for Barratt's shares, signaling a positive outlook for investors based on the current valuation and future potential post-acquisition. Morgan Stanley also resumed coverage on Barratt with an Equalweight rating, reflecting the new business landscape.
Overall, Barratt's acquisition of Redrow has boosted its position in the housing market, with projections indicating significant growth in completions, revenue, and profit margins. The synergies from the acquisition are expected to further enhance Barratt's financial performance.
In terms of financial data, Barratt maintains a stable valuation with a market cap of $6.65 billion and a price-to-earnings (P/E) ratio of 22.65. The company's cash position, dividend yield of 5.44%, and historical price total return of 20.67% over the past year make it an attractive option for income-focused investors.
Looking ahead, InvestingPro offers comprehensive insights on Barratt Developments, helping investors navigate the complexities of the market and make informed decisions. With timely data and analysis, investors can assess Barratt's financial health and market potential to optimize their investment strategies.
