Jefferies, a major City adviser, is downgrading its 2016 estimate for Countrywide’s performance over the rest of this year.
In a statement this morning it said that as a result of weak transactions, Brexit uncertainty, stamp duty dampening the high end of the market and Countrywide’s decision to scale back its expansion plans, it was downgrading Countrywide’s status from ‘Buy’ to ‘Hold’.
Jefferies said this morning: “The UK housing market and political landscape have changed significantly since the [Countrywide] 'Building Our Future Strategy' was launched one year ago. In our view, it is no longer the right time for mergers and acquisitions. We have therefore scaled back our assumptions on M&A activity, which was a significant part of the expansion strategy. We have also reduced margins to reflect the fact that when housing transactions slow, operational gearing turns from friend to foe.”
Last week we reported that Countrywide's share price was hovering around 200.
In another announcement this morning, Jefferies also downgraded its advice for LSL Property Services from ‘Buy’ to ‘Hold’.
The consultancy stated that “market headwinds” are building for 2017 and warns that housing transactions will fall by five per cent in the UK outside of London and by 10 per cent within London.
”We suspect that the existing homes market in the UK will remain subdued until the uncertainties around Brexit abate” the Jefferies note to investors states.
Jefferies cites as evidence last week’s Land Registry data showing transactions in England were down 32 per cent year on year and down 54 per cent in inner London.