Crest Nicholson, Barratt Redrow: Jefferies Highlights ‘Compelling Risk/Reward’

In a note to clients this week, Jefferies took a bullish stance on UK housebuilders Crest Nicholson and Barratt Redrow, upgrading both stocks to “Buy” from “Hold” as it identifies attractive opportunities amidst market challenges.

Crest Nicholson was assigned a price target of 185p, with Jefferies highlighting the company’s “compelling risk/reward” profile. 

While acknowledging that the coming months may present difficulties, the firm’s analysts emphasised the undervaluation of shares, currently trading at less than half of their net tangible asset value (NTAV). 

This discount has bolstered Jefferies' confidence in Crest Nicholson's long-term potential despite near-term volatility.

Similarly, Barratt Redrow was given a price target of 507p, with Jefferies’ analysts noting potential adjustments to the company’s net tangible asset value following an accounting update in February. 

However, the firm argued that the stock’s current valuation, trading at a 10% discount to prospective NTAV (PNTAV), made it “too cheap” to ignore.

The upgrades come as the UK property market grapples with a mix of economic pressures and evolving consumer demand. 

A report from the Financial Times recently noted that renewed inflation fears “are hammering the UK property sector,” with concerns over borrowing costs, the UK Budget and the election of Donald Trump sending share prices lower.

Crest Nicholson shares are down more thann 26% so far this year, while Barratt Redrow, which recently completed a merger, is down over 11% in the last month.