On Friday, Deutsche Bank adjusted its price target for Crest Nicholson (CRST:LN) shares, a British residential developer, reducing it from GBP 2.64 to GBP 2.55 while maintaining a Buy rating on the stock.
The revised price target comes in response to the company's interim results, which revealed increased margin pressures and exceptional costs linked to historical and legacy projects.
The company's new guidance indicates an anticipated 36% year-over-year decline in adjusted profit before tax (PBT), prompting Deutsche Bank to lower its PBT forecasts for fiscal years 2024, 2025, and 2026 by 42%, 27%, and 2%, respectively.
Despite the challenging market conditions and the drag from low margin legacy sites, the bank anticipates these factors to become less significant in fiscal year 2025 and beyond.
Deutsche Bank's revised target price of 255 pence is based on a consistent methodology, taking into account a lower net tangible assets per share (NTAps) and return on tangible equity (ROTE).
The firm notes that while Crest Nicholson faces more significant issues and yields lower returns compared to its peers, its current 30% discount to net tangible assets is considered substantial, especially when compared to the sector's average premium of 20%.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.