Canaccord ups its target price on Barratt

Canaccord analyst Aynsley Lammin kept his 'buy' rating on Barratt shares and increased his target price to 875.0p from 820.0p.

Barratt had also extended its special dividend to 2021 in February as it reported a rise in first-half profit and its highest home completions in 12 years.

Lammin said he expected decent volume growth and firmer margins for the foreseeable future, supporting modest growth in net asset value per share. The wider housing market could continue to improve, giving Barratt the potential to outperform his estimates, he said.

Barratt's shares are the best performers in the UK housebuilding sector, having gained more than 50% in the past year, leaving its valuation less compelling than before. But in absolute terms the shares are supported by a strong balance sheet, "self-help delivery" and a dividend yield of about 6%, Lammin said in a note to clients.

"Barratt continues to deliver well and the strong results are testament to this," Lammin wrote. "After a strong first half and encouraging start to the year, we have edged our estimates higher mainly on better volume assumptions.

"[...] The balance sheet remains in good shape and arguably too conservative given the level of average net cash."

Lammin's note failed to boost Barratt's share price. The shares were down 3.2% to 811.60p at 15:36 GMT.