Berenberg still sees upside at Crest Nicholson after profit warning

The broker pointed out that the stock is trading at just 12x trough EPS, and 0.5x tangible net asset value.

"This leaves the group, even on significantly downgraded forecasts, as the most lowly rated housebuilder in the peer group, and we think this asset-backed valuation is very compelling," said analyst Harry Goad.

"It is on account of this valuation support that we keep our 'buy' rating."

In an unscheduled trading update on 21 August, Crest Nicholson said it had seen a marked deterioration in sales rates over the past seven weeks, with 0.25 houses sold per site per week, down from 0.5 a year earlier.

Profit before tax is now expected to come in at £50m for the financial year ending 31 October, a 30% cut on previous guidance and down from £138m the previous year.

The downgrade to forecasts means Berenberg has cut its target price from 310p to 250p.

"While we acknowledge the company’s comment that higher mortgage rates have affected customer demand, we are nevertheless surprised by the extent of the change in outlook and guidance, which stands out as more marked than peers," Goad said.

"With hindsight it appears the management assumptions for what it could achieve in its H2 were far too optimistic."