RBC Capital Markets slashes Crest Nicholdon target price

(Sharecast News) - Analysts at RBC Capital Markets cut their target price on housebuilding company Crest Nicholson from 155p to 95p on Wednesday after the firm followed Berkeley Group in resetting expectations just a few short weeks after issuing a "robust trading update". RBC Capital said the "temperature of the UK housing market has cooled quickly and significantly", and stated that it doubts that Berkeley and Crest "will be the only housebuilders to catch a cold".

The Canadian bank noted that whilst there wasn't "a cure for a housing market cold", a government-backed demand stimulus package "would ease the symptoms", and with housing supply falling rather than rising, it stated that if the government really wants to see an increase in housing supply it will "need to act, or cross all its fingers and toes".

RBC Capital, which reiterated its 'outperform' rating on the stock, reduced its earnings per share estimates by 122%, 85% and 59% across FY26-28, respectively, driven lower sales rates, lower land sales, lower ASPs, lower margin assumptions, and higher interest costs.

"We now forecast FY26 EBIT of £10m (revised guidance: £5-15m), compared to £35m previously. We have reduced our P/TBV valuation multiple (valued on FY26e and FY27e book value) from 0.55x to 0.35x, which reduces our price target from 155p to 95p, reflecting a more uncertain macroeconomic environment, and uncertainty surrounding Crest's balance sheet positioning," said RBC Capital.

Reporting by Iain Gilbert at Sharecast.com