Crest Nicholson PLC (LSE:CRST) shares fell further on Wednesday as Deutsche Bank downgraded the housebuilder from buy to hold and slashed its target price by 65% to 79p, a day after the company issued a profit warning that has now drawn a wave of analyst downgrades.
RBC Capital Markets, which maintained its outperform rating, cut its target price from 155p to 95p, describing the UK housing market as having "cooled quickly and significantly" and warning that Crest and Berkeley Group are unlikely to be the only housebuilders to catch a cold.
Deutsche Bank analyst Chris Millington said the downgrade reflects a sharp deterioration in trading conditions, with Crest now guiding to earnings before interest and tax margins of just 1-3% in financial year 2026, against 6% a year earlier, and expecting to report a loss at the pre-tax level.
The company's unscheduled update revealed that while reservation rates have so far been largely unaffected by Middle East uncertainty, visitor numbers and enquiry levels are beginning to weaken.
Crest has cut its full-year 2026 volume expectations by approximately 11%, slashed land sale revenue guidance by around 50% to £40 million, and flagged build cost inflation of 4-5%, up from prior low single-digit guidance.
The deteriorating outlook has prompted the company to seek a temporary relaxation of its banking covenants, with RBC now forecasting net debt of £111 million by year-end against prior guidance of £15-65 million.
Deutsche Bank said it believes Crest can navigate the current difficulties without raising external equity, but warned that returns in the foreseeable future are expected to remain well below the company's cost of equity.
RBC reduced its earnings per share estimates by 122%, 85% and 59% across financial years 2026 to 2028, respectively, and said the company will pay no dividend in financial year 2026.