The US bank notes that Berkeley shares have underperformed the housebuilding sector by 21% year to date and its previous 50% premium has now been replaced by a slight discount.
Concerns have centred on cladding remediation and the impact of softer reservations on medium-term earnings due to ‘de-urbanisation’.
The broker though expects reservations to improve while migration from Hong Kong is likely to be ‘meaningful’ and boost profits by 4% annually.
Results are due on 23 June when the builder’s attributes of a longest duration landbank, strong returns and surplus cash will come to the fore, JPM adds.
Numbers are likely to be considerably ahead of the peer group and the bottom-end of guidance, while a healthy balance sheet should underpin a firm commitment to capital returns going forward.
JP Morgan has upgraded to ‘overweight’ from ‘neutral’ with a price target 5,400p.
Shares rose 2.9% to 4,866p.