Housebuilder Barratt Developments PLC (LSE:BDEV) and other rivals in the sector are expected to face downward pressure to their share prices as several headwinds pose a threat over the coming years.
Analysts at Deutsche Bank lowered the FTSE 100 firm’s pre-tax profit forecasts for the 2025/26 financial year by between 9% and 10%.
Experts at the German bank said it expected difficulties in the sector to continue due to low sales rates, planning delays, depressed margins and fire-safety liabilities.
“We think some other stocks in the sector will need to reduce estimates due to the same headwinds, which is likely to act as a headwind to share prices,” analysts said.
“On this basis, we see limited upside in Barratt and the wider sector at present and think that the optimism surrounding the new government and interest-rate cuts is overdone.”
Deutsche Bank rates Barratt a ‘hold’ and predicts its share price will reach 500p, close to flat compared to Monday’s open at 497p.
Last week, Barratt said it expected to complete 1,000 fewer homes this year compared to last.
Management stated that the macroeconomic backdrop “remains challenging”, but signalled optimism of Labour’s pro-build manifesto pledges.