Credit Suisse reiterates 'underperform' rating for Countrywide after 'flawed strategy'

In a research note sent to clients, Credit Suisse’s analysts noted how Countrywide management itself had said the company might experience its "most significant challenge since its IPO", which led them to place the company at the bottom of its through-cycle multiple range.

They also marked down their estimates for sales between 2018 and 2020 by an average of 12% and their EBITDA forecasts for 2018 and 2019 by an average of 32%.

Combined, that saw them revise their target price for Countrywide's shares down from 111.00p to 77.00p.

They also highlighted how the group, which is the largest estate agent in the UK, as well as being the largest letting agent, single mortgage broker and one of the largest surveyors, was now attempting to reverse its strategy of the past three years.

Yet the company would struggle to implement a recovery plan in an "unsupportive" UK housing market, they believed, albeit while projecting a reduction in net debt to £159m from £181m.

“A simple read of the titles printed in the group's FY17 results presentation summarises its recent performance in Sales & Lettings: "a disappointing year", "difficult market", "flawed strategy and execution", "we scored own goals",” they pointed out.

“Countrywide continues to suffer from the double impact of challenging market conditions in conjunction with its own significant internal execution problems. The group's Sales & Lettings business has lost 26% market share since 2014, Countrywide is highly levered, and the group is entering 2018 with a "significantly reduced" pipeline of activity.”

As of 1259 GMT, Countrywide’s shares were down 1.08% at 82.50p.