Barratt Redrow Medium-Term Guidance Suggests a ‘Strong Rebuild of Profits’

Deutsche Bank raised its rating for Barratt Redrow (LON: BTRW) from Hold to Buy in a note to clients his week, maintaining its price target at 536p, citing solid trading and a positive outlook following the housebuilder’s interim results.

According to Deutsche Bank analysts, “Barratt’s interims set a positive tone, with the group stating current trading was solid and guiding to adjusted FY25 PBT toward the top of the consensus (pre PPA).” 

The firm has raised its FY25 profit before tax (PBT) forecast by 5%, though it left projections for later years largely unchanged.

Looking further ahead, Deutsche Bank sees a “strong rebuild of profits” driven by a recovering outlet profile and synergies from the Redrow deal. 

However, it noted that medium-term return targets indicate lower return on equity (ROE) than pre-pandemic levels, in line with broader industry trends.

Despite recent share price weakness, the bank believes Barratt is currently trading broadly in line with its net tangible asset (NTA) value, suggesting that a potential recovery is not yet fully priced in. 

The bank estimates that its target price of 536p implies a 24% upside, noting that the stock has declined 23% since August 2024.