Panmure Gordon has reiterated its positive view of house-builder Barratt Developments in spite of the negative market reaction to the firm's preliminary results on Wednesday, saying that there's still plenty of upside to the stock.

Results were broadly in line with the broker's estimate following a detailed pre-close trading update in July. Pre-tax profits of £110.7m, up 159.3% year-on-year, was slightly above Panmure's £110.4m estimate. Meanwhile, net asset value (NAV) per share came in at 213p, compared with the 219p forecast.

Furthermore, the broker noted: "It appears that trading for the 2013 financial year has started soundly and the group should see further improvement in net margins as the percentage of new land increases."

Panmure said that it is fairly comfortable with its forecasts for the current year. It forecasts pre-tax profit to total £162.8m in the year to June 2013. While no dividend was declared for the prior year, the broker expects a payout of 2.5p in the coming year.

Barratt's shares are up over 85% since the start of the year.

"Although Barratt has had a significant increase in its share price since the start of the year, we still see plenty to go for with the stock on a PNAV [price-to-NAV] rating of 0.74x. We therefore maintain our 'buy' recommendation and 190p target price."

By 11:03, shares were down 6.48% at 158.7p.

BC

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