Numis upgrades Berkeley to 'add'

18th Jun 2014 11:23

Numis Securities has upgraded housebuilder Berkeley Group from 'hold' to 'add', saying that the stock is "too cheap" after a broadly in-line set of annual results.Pre-tax profits in the year to April increased by 40.4% to £380m, slightly ahead of Numis' £372m forecast.The broker has raised its estimates for the next year slightly and expects Berkeley to grow profits to £510m in the year ended April 2015."In our view, Berkeley is too cheap, in keeping with the wider housebuilding sector, although the share price may be held back over the next year due to political rhetoric concerning the London housing market in the run up to the General Election," Numis said.The broker believes that Berkeley is capable of paying at least 180p per share in dividends per year, which equates to a sustainable dividend yield of 8%.Despite the positive comments, the stock was trading 5% lower at 2,148p on Wednesday morning after cautious comments from the company, which said it "remains alert to the uncertainty which will arise from changes to the economic and political landscape".BC