Deutsche Bank has maintained its 'buy' rating on Crest Nicholson PLC (LSE:CRST) but has cut its price target from 255p to 228p.
Its analysts highlighted the challenges the UK builder continues to face from older developments, with pre-tax profit down 53% year-on-year and nearly 90% below its 2017 peak.
These legacy issues are expected to remain a drag on performance for the next couple of years, limiting profitability and restricting investment due to ongoing fire safety costs.
However, Deutsche believes the company is beginning to turn a corner as it exits these problem sites.
Despite this, the bank expects Crest's returns to stay low relative to other housebuilders, supporting a valuation discount.
The revised target price reflects the company’s reduced net tangible assets following additional financial provisions and the likelihood of weaker profits in the near term.
Crest Nicholson is a UK housebuilder specialising in large-scale residential developments, particularly in the South of England. The company has been working through legacy issues and regulatory costs as it aims to stabilise its business.
The shares were flat at 171p.