Shares of the UK-based Barratt Developments PLC (GB:DBEV) fell nearly 2% as of writing after the company’s pre-tax profits plunged 76% year-over-year to £170.5 million in FY24 (ended June 30, 2024). Despite a fresh wave of optimism in the housebuilding sector, the company is cautious and does not expect new home completions to rebound in the upcoming financial year.
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Barratt Developments is a housebuilder in the UK, specializing in residential property development.
Barratt Reports Mixed FY24 Results
In FY24, Barratt reported a revenue of £4.17 billion, marking a year-over-year decline of 21.7%. Also, its new home completions fell to 14,004 units from 17,206 units in FY23.
Despite declining more than 56% year-over-year, the company’s adjusted pre-tax profit of £385 million surpassed the average analyst estimate of £365 million. Looking ahead, the company witnessed some favourable signs in the new fiscal year, suggesting a shift in buyer sentiment. Barratt highlighted that its average weekly net private reservations per outlet from July 1 to August 25 in FY25 reached 0.58 units, up from 0.42 homes during the same period last year.
Additionally, the company acquired Redrow in FY24 and is working on the deal’s regulatory clearance with the CMA (competition and markets authority). Through this deal, Barratt aims to leverage a recovery in the housing market and strengthen its market presence as a homebuilder.
Analysts React to Barratt’s Results
UBS commented that Barratt’s results were mostly as expected. Additionally, the company’s guidance for FY25 suggests a slight profit decline, falling short of UBS’ expectations. Prior to the results, UBS analyst Gregor Kuglitsch upgraded his rating on BDEV stock from Hold to Buy, forecasting 23.14% upside potential.
Meanwhile, analysts at Stifel noted that the results showed a slight margin improvement and remarked that the new fiscal year has begun positively.
Is Barrett a Buy?
On TipRanks, BDEV stock has been assigned a Moderate Buy rating based on three Buy and four Hold recommendations. The Barratt share price target is 580.29p, which is 14% above the current level.
