Purplebricks Group PLC (LON:PURP) shares were in the red on Friday as Berenberg turned negative on the online estate agent after a profit warning.
In a note on UK estate agents, Berenberg double downgraded its stance on Purplebricks to ‘sell’ from ‘buy’ and slashed its target price to 80p from 470p.
Purplebricks shares fell 7.6% to 128p in late morning trading.
In late February, Purplebricks saw more than £100mln wiped off its market value after it cut its forecasts for the year and said it would part ways with its UK and US bosses.
READ: £100mln wiped from Purplebricks’ value as UK and US bosses leave amid profit warning
UK chief executive Lee Wainwright is stepping down after a year at the helm for personal reasons, while US CEO Eric Eckardt is also leaving after two years.
The company reduced its revenue forecast to £130-140mln from £165-175mln following struggles in the US and Australia divisions.
UK housing market slows
Closer to home, there are also worries about Brexit and the impact it could have on the property market if the UK leaves the European Union without a deal.
There are already signs of a slowdown with recent data showing softer house prices.
Berenberg said estate agents have endured a challenging past few years.
“The changing affordability dynamics in the UK housing market have resulted in a contracting fee pool as the secondary market has stagnated,” the broker said.
“Alongside general market weakness, the emergence of the online/hybrid model has placed additional pressure on fees. We do not anticipate a material reversal of these fortunes in the short term, and forecast the transactional fee pool to continue to decline by 1% per annum.”
Berenberg upgrades Foxtons and Countrywide
Berenberg upgraded Foxtons Group PLC (LON:FOXT) to ‘hold’ from ‘sell’ and lifted its target price to 60p from 50p.
It also raised its rating on Countrywide PLC (LON:CWD) to ‘buy’ from ‘hold’ but cut its target price to 10p from 95p, saying it the shares “are investible again”.
Shares in Foxtons were down 1.1% to 63p while Countrywide was down 0.9% to 7.45p.