The market “should be encouraged” by Barratt Redrow PLC (LSE:BTRW)’s improved sales rate in the combined group’s inaugural trading statement since the completion of the £2.5 billion merger.
Barratt Redrow detailed a 33% year-on-year improvement in the sales rate between 1 July and 13 October and confirmed a £90 million cost-saving spree (which is likely to come with job losses given nine offices are set to close).
Stifel reiterated its 540p price target and buy recommendation as a result, stating that “the Redrow merger should see improving newsflow from here and site opening momentum is improving”.
Peel Hunt analysts are more bullish with a 585p price target.
Barratt Redrow’s trading statement “should remind investors of the potential cost benefits to come from the deal, as well as longer-term gains from better asset utilisation”, they said.
Peel Hunt added: “Over the medium term, benefits should also come from the addition of extra sales outlets (45 by FY28) on larger sites, allowing the group to increase overall asset turn.”
Barratt Redrow’s shares added 2% in response to the trading update, though at 482.9p, they remain 13% lower year to date.