Analyst Chris Millington cut the target price to 454p from 536p, while maintaining a “buy” rating on the stock16 Feb 2026 11:01
Investing.com -- Shares in Barratt Redrow fell over 2% on Monday after Deutsche Bank downgraded its profit forecasts and slashed its price target by 15%, citing deteriorating trading conditions and the mounting burden of fire-safety remediation costs.
Analyst Chris Millington cut the target price to 454p from 536p, while maintaining a “buy” rating on the stock, which closed at 388.90p.
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The brokerage reduced its underlying pre-tax profit estimates by 9% for fiscal year 2026, 6% for FY27, and 7% for FY28, according to Deutsche Bank.
The downgrade follows Barratt’s first-half results, which Millington described as broadly in line with expectations but revealed the impact of challenging trading conditions.
Tough market dynamics through the first half pressured both margins and the company’s order book, Deutsche Bank said.
A significant factor weighing on Barratt’s valuation is its £1.3bn provision balance, which Deutsche Bank said will depress cash generation despite management’s plans for outlet growth and margin improvement.
The brokerage raised its discount rate from 8% to 10%, bringing it in line with historical averages and better reflecting the cash impact from fire-safety remediation work.
Despite the near-term headwinds, Deutsche Bank projects the company should deliver above-average profit growth over the next few years, driven by management targets for outlet expansion and improving margins.
The analysts FY28 return on tangible equity forecast stands at 8.5%, suggesting Barratt’s current 0.79x price-to-net tangible assets ratio is broadly appropriate, according to Millington.
However, Deutsche Bank believes the stock deserves a higher rating, pointing to potential improvement in market conditions that could be supported by a government demand-side initiative.
The revised target price of 454p aligns with the brokerage’s calendar year 2026 net tangible assets valuation.
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