Deutsche Bank has cut its target price on Vistry Group PLC (LSE:VTY), the housebuilder, to 370p from 600p after the company flagged that aggressive discounting to drive sales is expected to weigh on profit margins.
Analyst Chris Millington said management's focus on cash generation had supported a roughly 30% year-on-year increase in sales rates, but the heavier discounting required to achieve that pace, combined with rising build cost inflation, would come at a cost.
Deutsche Bank reduced its pre-tax profit forecasts for 2026, 2027 and 2028 by approximately 20%, driven principally by lower margin assumptions, though year-end net cash estimates were nudged slightly higher.
The broker also cut its target valuation multiple to eight times 2026 earnings from 10 times, reflecting heightened macroeconomic uncertainty, a large second-half skew for profits and a broader de-rating across the housebuilding sector.
Vistry shares trade at 285.6p, leaving the reduced 370p target, implying roughly 30% upside, but Millington retained a hold recommendation, arguing the stock is likely to remain depressed until market conditions normalise and earnings stabilise.
Deutsche Bank said it continued to see material upside to Vistry over the longer term, but that the current environment offered insufficient visibility to turn more positive.
The update underlines the difficult trade-off facing housebuilders as they chase volume in a weak market while absorbing cost pressures that erode the profitability of each home sold.