Equities Update: Barratt Redrow, Reckitt, Tesla, Unilever, Travis Perkins…

Barratt Redrow see a steady recovery as private bookings rise

Mark Crouch, market analyst at eToro comments: Barratt Redrow’s latest trading update does paint a more upbeat picture for investors, albeit slightly. With the UK housebuilder struggling for traction in a year when many of its peers have shown valiant signs of recovery, shareholders will point to Barratt’a merger with Redrow as the primary reason for the underperformance.

However, with the deal finally over the line, the housebuilder can concentrate its efforts on breaking out of the rut it currently finds itself in. Subdued homebuyer confidence hasn’t helped matters but with inflation falling sharply in recent weeks, further interest rate cuts are viewed as a formality by the close of the year, offering more incentives to buyers currently sitting on the fence.

Up until this point the housebuilder has been able to fall back on its strong balance sheet to weather the challenging economic conditions, and now with a significantly larger pool of assets, Barratt Redrow’s revenue stream will get an additional boost. Just in the last few weeks the combined company recorded a jump in private booking rates by more than 35%, an encouraging sign that buyer confidence is coming back into the market.

“Just what Tesla (and Elon Musk) needed”

 
Garry White, Chief Investment Commentator at Charles Stanley: “Following disappointing quarterly delivery numbers and a muted reception to the group’s new Cybertaxi, there was plenty of food for the Tesla bulls in its third-quarter numbers. They will have been relieved. Following a period of stiff competition in China from BYD and Geely, it looks like margins may have turned the corner. Gross margin was up substantially – to 17.1% against market expectations of 14.9%. Adjusted earnings beat market expectations, with revenues slightly ahead. Cash flow beat expectations and the group’s outlook statement was relatively bullish too, predicting growing sales in 2025. After a difficult year for its share price – which is down about 14% so far in 2024 – this is a welcome set of positive results and is just what Tesla (and Elon Musk) needed. The only question is: can it be sustained?.”
 

Power brands lead the way for Unilever

Adam Vettese, market analyst at investment platform eToro, says: “Unilever’s growth action plan is continuing to pay off with a fourth consecutive quarter of sales growth. The consumer goods giant’s decision to focus on its ‘Power brands’, which make up over 75% of sales, as well as streamlining costs, have helped shares climb by a quarter this year so far. Further efficiencies will be realised when the ice cream business is spun off which is also supposedly on track.

“The firm has also been savvy on raising prices, with increases coming in less than analysts’ estimates. This helps consumers with an inflation stretched budget keep more of their products in their baskets and not switch to cheaper generic alternatives.

“The dividend has been maintained at the elevated level from the previous quarter and the share buyback programme is nearing completion. All in all shareholders will be pretty pleased with what they’ve read this morning and will look forward to more of the same.”

Travis Perkins slash profit target again

Mark Crouch, market analyst at investment platform eToro, says: “It felt like only yesterday that Labour’s housing policy pledges were going to rejuvenate the UK property market and fire the sector back into favour. However, Travis Perkins‘ latest trading update does not offer any support to that narrative, in fact by the looks of these numbers, quite the opposite.

“Travis Perkins, the UK’s largest supplier of building materials, has slashed profit guidance for the second time in three months as revenues continue to fall. Weaker demand has been driven by a consumer that is still reluctant, and despite initial interest rate cuts, a feeling of uneasiness still lingers over the market.

“Along with battling the challenging market conditions, Travis Perkins, according to their new CEO, has become distracted and overly internally focused, which has further impeded the company’s overall performance, and is something they will need to put right fast if they are to reverse what is a worrying trend. While further rate cuts could be on the cards in November, for Travis Perkins, November can’t come soon enough.”