Search Share Prices
Jefferies downgrades McCarthy & Stone, slashes price target
Jefferies downgraded McCarthy & Stone to 'hold' from 'buy' on Wednesday and slashed the price target to 116p from 267p following the retirement housebuilder's profit warning a day earlier.
"Whilst, the majority of Last Time Buyers voted for Brexit it seems to have made them more cautious around the housing market than Help to Buy aided First Time Buyers. The issue we see facing McCarthy & Stone is that after two years of increased Last Time Buyer inertia, we do not see how or why this paralysis will lift before the dust settles on the outcome of the UK's departure from the EU."
Still, Jefferies said it remains a fan of McCarthy & Stone's retirement living products and services, and that its "unparalleled" performance in customer satisfaction surveys suggests that the water at the well of the company "refreshes the parts others cannot reach".
"The problem is getting people to take the plunge," it said.
Jefferies cut its FY18 operating profit estimate by 32% to £72.5m, which is towards the mid-point of the current guidance range of £65-80m. Looking beyond FY18, it cut its operating profit estimates for FY19 by 49% and for FY20 by 48%.
McCarthy issued a profit warning on Tuesday amid increased caution from potential customers.
An anticipated strong spring selling season failed to materialise and the FTSE 250 company said it now forecast 2,100-2,300 sales for the financial year ending 31 August, from the 2,302 last year, meaning profits could fall between 17% to 32% to an expected operating profit range of £65-80m.
At 1030 BST, the shares were down 2.3% to 105.70p.