Countrywide shares hit another new low as property sector drifts down

Countrywide’s share price hit another new low yesterday of around 115.5p - a fall of just over four per cent on its already-fragile opening price of 119p following a downgrading by international investment bank Credit Suisse. 

Countrywide was relegated to 'underperform' from 'neutral' in Credit Suisse’s generally pessimistic assessment of UK estate agencies. 

"Market conditions are unsupportive and with a stretched balance sheet and the lowest cash conversion ratio of the sector, we believe Countrywide's ability to invest in its self-help initiatives and deliver earnings growth will be severely constrained" says the bank. It says that while there is merit in the company's much-vaunted digital roll-out and ‘cost transformation strategy’ Countrywide now sees “its financial firepower is diminished.”

Credit Suisse continues: "With market conditions remaining challenging and the group having suffered a high degree of management attrition over the past 18 months, the turnaround is likely to be slow and we believe it will be some time before any benefits of the program are realised."

At its lowest point yesterday, the market capitalisation of the Countrywide group was just below £277m. 

The troubled agency group’s long-term share price fall has been well documented; in spring 2014 it reached a high of 686.50p and as recently as early July it was trading at well above 150.00p. However, in recent weeks its share fall has been gathering pace. 

Foxtons, regarded by many as the other stock exchange barometer of the housing market - concentrated in London - was also trading around its lowest point. It closed last Friday at a record low of 70.50p and returned to that point yesterday before moving slightly higher. 

Even Purplebricks - now trading by more than 130p lower than its early-August high of 514.50p - has drifted in recent days. On Friday lunchtime last week it dipped to 341.25 but during Friday afternoon it rose a dramatic 50 points or so. However, it slipped again yesterday to close around 4.6 per cent down on the day.