Citigroup gave a knock to Vistry Group PLC (LON:VTYV), downgrading its rating for the housebuilder to ‘neutral’ from ‘buy’ following a recent update as it feels the near-term risk-reward for the stock is “less compelling”.
The US bank also trimmed its target price for the FTSE 250-listed stock to 785p after tweaking its estimates to reflect a slower fixed cost absorption on the back of the coronavirus (COVID-19) disruption.
READ: Vistry expects margins to restore as market trends continue to improve
In a note to clients, the Citigroup analysts said: “With management focus clearly on integration, delivery of synergies and deleveraging, we believe the group is less likely to benefit from the potential demand boost in the short term driven by the recent stamp duty cuts.
“As a result, we see limited upside on volume performance near term and risk-reward looks less attractive in this context. Stock trades on a 2020 P/B of 0.89x and our PT implies a book multiple of c.1 times.”
They concluded: “We move Neutral on the stock as we see better value elsewhere in the sector.”
In afternoon trade on Friday, Vistry shares were trading at 715.50p, up 0.2% on Thursday’s close.