Barratt Redrow PLC (LSE:BTRW) is facing a “slow grind” on margins despite resilient trading, according to RBC Capital Markets, which has cut its price target to 425p from 450p and reiterated a Sector Perform rating.
Shares were trading at 393.8p (up 1.4%), implying around 10% upside to the revised target.
RBC said Barratt’s mid-year accounting change drew attention, but investor focus had shifted towards speculation about potential government support for first-time buyers, which management described as key to a sustained housing market recovery.
The broker highlighted a disconnect between largely static new-build prices since 2022 and ongoing build cost inflation, leaving margins under pressure.
Adjusted gross margin fell 200 basis points to 15% in the first half, with build cost inflation running at about 1% in the period and guided at 2% for the full year.
RBC lowered its 2026 adjusted pre-tax profit forecast by 2.1% and reduced tangible book value estimates, driving the target price cut .
While synergies from the Redrow acquisition remain on track, RBC said investors are likely to wait for clearer evidence of stability and margin recovery before re-rating the shares.