Broker snap: Target upped at Berkeley

7th Apr 2011 12:19

RBS ups its forecasts for housebuilder Berkeley Group after it highlighted a further step-up in volume momentum.The broker notes that the group's reservation growth rate has risen to 25% year-on-year in the second half, from 20% in the first, driven by both a shift in group strategy and the benefit of a strong underlying London market.As a result, 2011 and 2012 pre-tax profit forecasts are raised by 4% and 10%, respectively."We value Berkeley differently from other housebuilders, given the importance of capturing the value of a long, highly profitable landbank beyond just the short-term, and indeed the probability of future value creation on further land buying/old land optimisation," said the broker. A 'buy' is maintained, and the target price is raised to 1,180p, from 1,060p.---bc