Broker snap: Berkeley a strong performer but look elsewhere, says Jefferies

23rd Dec 2013 10:27

Berkeley Group Holdings is a "strong performer" but there are greater value opportunities elsewhere, according to Jefferies International.The broker reiterated a 'hold' rating and raised its price target by 2.5% to 2,459p following the housebuilder's half year results which were in line with guidance. Jefferies said investors would get better value at industry peers such as Barratt Developments, Taylor Wimpey and Bovis."Interestingly with many talking of house price bubbles in London, Berkeley is yet to call the top and is putting its money where its mouth is, having purchased £278m of land during H1 2014, compared to £317m in the whole of FY 2013," the analyst said.While critics argue that the Help to Buy house price limit of £600,000 unfairly helps those who need help the least - especially those in London, which has the highest house prices in the UK - Jefferies believes this is not the case.It noted that 4% of Berkeley Group's sales were assisted by Help to Buy while other housebuilders with a broader geographic spread have reported sales under the scheme at 40% of volumes. "In our view Help to Buy is helping those most in need, rather than being 'misused' by the wealthy."The broker added that since Berkeley is primarily focused in London, any shocks in the city's housing market are likely to impact the price of the shares more than its peers, which have less focus on the capital. Shares rose 0.24% to 2,499p at 11:15 on Monday.RD