Broker snap: Investec ups target for Berkeley

6th Aug 2012 10:49

After an 'impressive' performance by house-builder Berkeley in the year to April 30th, Investec has raised its target price for the stock from 1,500p to 1,560p and reiterated its 'buy' recommendation for the shares."Following last year's announcement of the return of £13 per share by 2021, these results were more a case of affirming the continuation of the strong trends which underpin the deliverability of this return," the broker said in a research note on Monday morning.Investec says that Berkeley is stepping up its activity levels in order to take advantage of the limited supply of new housing in London. It has highlighted seven major London projects, comprising 22% of the current land bank which should drive sales over the next five years."However, we would caution that (a) these major schemes will increase the investment required in WiP in the near term, and (b) increase the uncertainty on the timing of completions, thereby introducing a degree of lumpiness to the earnings," the broker said.Meanwhile, Investec notes that Berkeley has already come "within a whisker" of achieving its 2010 five-year plan to double its £110m in pre-tax profit by 2015. The timing of the target has now been brought forward to this year.Shares were performing well on Monday, trading 3.57% higher at 1,481p by 10:49.BC