Berkeley slides on Berenberg downgrade; Bellway, Barratt Redrow outperform

Barratt Redrow

Today 14:18

** British house builder Berkeley Group BKGH.L falls 6% after a downgrade by Berenberg. Peer Vistry VTYV.L is down 5.1% after the same broker cut its target price 
** Berenberg says they continue to view Berkeley as high quality but because of its "relative share price outperformance in the past year — down by 7% versus sector down by 38% — and with no imminent recovery in the earnings cycle, we now see more compelling upside elsewhere in the UK housebuilding sector" 
** British homebuilders have been struggling because gilt yields, and therefore mortgage rates, have remained at elevated levels. High energy costs due to geopolitical events in the Middle East have meant build-cost inflation is now running well ahead of house price growth, the broker says
** Berenberg cut its price target for Vistry to 263 pence from 340, due to uncertainty on both underlying trading conditions and cash generation. The stock is currently at 261 pence
     ** Crest Nicholson CRST.L falls 3.8% after Berenberg cuts its price target by 2 pence to 78 pence
** Berenberg also upgraded Bellway BWY.L and Barratt Redrow BTRW.L to buy, both on more attractive valuations. Their shares are outperforming on Friday, down 0.3% and 0.9% respectively 

(Reporting by Alun John)
((alun.john@thomsonreuters.com;))