Purplebricks PLC (LON:PURP) came under pressure on Thursday after analysts at UBS reduced their long-term market share assumption for the online estate agents to 12% from 15%.
The Swiss bank’s analysts also cut their target price for Purplebricks’ shares to 285p from 305p and maintained their ‘sell’ rating on the stock, which was trading at 336.4p in late afternoon trading, down 6.5%.
READ: Purplebricks hits back at punchy sell note from US broker
In a note to clients, the analysts said: “Our latest UBS Evidence Lab property listings tracker up to 5-Mar-18 indicates that growth may be slowing for Purplebricks, with 'Subject to Contracts' (STC) market share remaining broadly constant at c.5% since September 2017.”
They added: “Given the importance of the Spring Market, we believe that this level of progress will be below management's expectations, and will raise questions around the potential market share Purplebricks is able to achieve.”
The analysts said the reduction in its sum-of-the-parts-based target predominantly reflects a decline in their valuation of the UK business from 191p to 164p per share.
They added that this includes reducing their long-term growth rate assumption for the UK business to 2.5% from 3.0%
The analysts pointed out: “Along with Purplebricks growth slowing, we can now see sustained growth from one of the challenger brands, Yopa, which has increased its market share to c. 0.5% of the market.
“Whilst this is still small relative to Purplebricks, Yopa's strong funding position to support further advertising campaigns means this brand represents a threat. In addition, the growing prevalence of the 'no sale no fee' proposition by other online agents may disrupt further market share growth for Purplebricks.