Wednesday preview: Barratt Developments reports trading update

Barratt Developments reports a trading update on Wednesday with analysts looking to see how the housebuilder has weathered a slowdown in London’s prime market.

Numis expects the company to report a “robust” trading update with annual earnings per share of 52.4p, compared to consensus forecasts of 53.1p and the previous year’s 44.6p.

“We think the main focus will be on Barratt London exposure given it does have some high price point developments, which will have inevitably been impacted by the slowdown in the Central London market,” analyst Chris Millington said.

“However, we think that this has been overplayed and Barratt actually has minimal exposure (relative to the scale of the group) to properties over £2m and most of its sales are sold to domestic purchases which will be supported by the Help to Buy scheme and lower mortgage rates.”

Traders will also be zoning in on Barratt’s outlook for the coming months amid worries about how the uncertainty surrounding the European Union referendum on 23 June will hurt the housing market. Some analysts also believe the introduction of higher stamp duty on buy-to-let properties will cause a slowing down.

“There will now highly likely be an appreciable easing back in buyer interest from the buy-to-let and second house buyers given that the April rise in Stamp Duty has kicked in,” said Howard Archer, chief UK and European economist at IHS Global Insight.

Halifax on Monday revealed house prices fell 0.8% in April compared to a month ago when prices had jumped 2.2% as buy-to-let investors rushed in ahead of extra taxes. On the year, growth eased to 9.2% in April from a 10.1% year-on-year gain in March.

Numis rated Barratt at ‘add’, saying it believes the company is “one of the more interesting large cap stocks” in the sector, given its returns still have substantial recovery potential. Barratt’s yield is higher than most housebuilders which have embarked on a more formal cash return strategy, Numis added.

Wednesday 11 May

INTERIMS
Compass Group, TUI AG Reg Shs (DI)

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Budget Statement (US) (19:00)
Crude Oil Inventories (US) (15:30)
MBA Mortgage Applications (US) (12:00)

FINALS
C&C Group, Experian

IMSS
Barratt Developments

SPECIAL DIVIDEND PAYMENT DATE
Plus500 Ltd (DI)

AGMS
Aberdeen Asian Income Fund Ltd., Afarak Group (DI), Centamin (DI), Centaur Media, Dunedin Enterprise Investment Trust, Ebiquity, Gulf Marine Services, IFG
Group, Indivior, JPMorgan American Inv Trust, Medaphor Group, Melrose Industries, National Express Group, Octopus AIM VCT 2, OneSavings Bank, Phoenix Group
Holdings (DI), Premier Oil, Rentokil Initial, Savills, Tritax Big Box Reit , TT Electronics, William Hill

TRADING ANNOUNCEMENTS
Barratt Developments, Barratt Developments, National Express Group, Premier Oil, Purplebricks Group, Renishaw, William Hill, Wood Group (John)

UK ECONOMIC ANNOUNCEMENTS
Industrial Production (09:30)
Manufacturing Production (09:30)

FINAL DIVIDEND PAYMENT DATE
BrainJuicer Group, Dairy Farm International Holdings Ltd. (Singapore), Hongkong Land Holding Ltd. (Sing.Reg), Jardine Matheson Holdings Ltd (Singapore Reg),
Jardine Strategic Holdings Ltd. (Singapore), Mandarin Oriental International (Singapore), Molins, Plus500 Ltd (DI), Smith & Nephew

Q1
Afarak Group (DI), Arrow Global Group