Broker spotlight, including Persimmon, Barratt, Bellway, Wood Group and Hunting


The housing stocks looks to be on “relatively full” valuations, according to broker Citi, which this morning hit the market with a raft of downgrades.

Analyst Aynsley Lammin pointed out the sector prices are up 19% in 2014, with Persimmon and Barratt the best performers. 

However there are still some attractions, not least the 5.6% dividend yield that will be attractive to income investors.

In his re-assessment of the sector, Lammin downgraded Barratt (LON:BDEV), Bellway (LON:BWY) and Persimmon (LON:PSN) to ‘hold’ from ‘buy’.    Taylor Wimpey (LON:TW.) and Redrow (LON:RDW) remain ‘buys’ and Berkeley (LON:BKG) is unchanged on ‘hold’.

“While we expect growth rates in UK housing and the sector’s financial metrics to moderate in 2015, we continue to expect good growth in net assets and attractive dividends being paid,” the analyst said.

“However, given the recently strong run in share prices, we are more cautious on valuation. 

“Attractive fundamentals and dividend yields should support sector share prices, but we see less scope for significant further capital gains across the sector at this point.”

Following on from the upbeat trading statement earlier Panmure Gordon repeated its ‘buy’ on Bellway (LON:BWY), telling clients:  “With the stock trading on a discount to the sector, we still believe there is further for the share price to travel.”  

Away from the builders, broker reports for the last few weeks have felt a little like a confessional for the analysts covering the natural resources sector.

And so the trend has continued as the oil price has shown little sign of recovering in the near-term at least. 

Deutsche Bank, which recently rejigged its calls on the world’s major oilers, has turned its attention to the companies that provide them with back-up services.

Deutsche in a note that posed as many questions than it answered, said it was still too early to turn ‘outright positive’ on the European oil services sector.

It said it saw limited support from the macro-economic environment and ‘downside risk’ as the capital investment taps are turned off.

Deutsche did have some good news for the granddaddy of the sector, Wood Group (LON:WG.), which it raised to ‘buy’. However, Hunting (LON:HTG) was downgraded to ‘hold’ with its valuation shaved back 200p a share to 700p. AMEC, meanwhile, remains a hold.

Elsewhere, there were three significant upgrades with Investec going to ‘hold’ from ‘sell’ on Centrica (LON:CNA), and UBS moving to ‘buy’ from ‘neutral’ on Spirent Communications (LON:SPT) and metal basher Laird (LON:LRD). Investec went to ‘add’ from ‘buy’ on Drax (LON:DRX).

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