JPMorgan slashes Purplebricks target price after disappointing update
JPMorgan Cazenove slashed its price target on overweight-rated Purplebricks to 188p from 400p on Friday following the company’s "disappointing" update a day earlier.
FTSE AIM 100
3,582.43
17:00 17/04/24
FTSE AIM 50
3,909.38
17:00 17/04/24
FTSE AIM All-Share
743.12
16:54 17/04/24
Purplebricks Group
0.31p
16:30 15/06/23
The company said on Thursday that it expected revenue for the current financial year to come in between £130m and £140m under IFRS 15, down from previous guidance of between £165m and £175m under IAS 18.
It also announced the departure of UK chief executive Lee Wainwright "for personal reasons" and the departure of US boss Eric Eckardt.
JPM said weakness was driven in particular by the international operations of the US and Australia.
"Key questions remain about: 1) the announced departures of key management figures (UK CEO, Lee Wainwright, and US CEO, Eric Eckardt) and 2) the level of opportunity going into the US (much weaker than expected US sales at this early stage are clearly worrying).
"With all that in mind (and materially reduced longer term estimates given a weak outlook), we reassess the investment case."
Despite the "clearly disappointing" news flow, it said it still sees potential upside in the longer term and that the shares are now too cheap.
JPM said Thursday’s closing price doesn’t even reflect the UK value - on conservative numbers - and includes nil valuation for the international assets.
At 1055 GMT, the shares were up 1.2% to 126.54p.