Shares in Berkeley Group Holdings PLC (LSE:BKG) fell after Deutsche Bank downgraded the stock, citing lower profits and shareholder returns following a recent tactical shift.
The housebuilder said at the start of this month that it will stop buying land and limit work-in-progress investment to current sales rates, a move that was said to reflect subdued demand and a tougher regulatory backdrop.
Analyst Chris Millington said the changes are expected to weigh on earnings, with profit before tax forecast to fall by more than 20% between the 2026 and 2028 financial years.
Return on equity is also expected to decline to around 7%, with reduced capacity for shareholder distributions.
As a result, Deutsche's target price was cut to 3,685p from 4,600p, versus the last close at 3,364p.
Millington said the revised valuation reflects weaker near-term returns, though some upside could come from Berkeley’s private rented sector (PRS) venture and any recovery in housing demand.
He said the new price target "balances depressed near-term returns, with potential upside from the PRS venture and a market recovery".