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Shares in Berkeley Group Holdings PLC (LSE:BKG) fell after Deutsche Bank downgraded the stock, citing lower profits and reduced shareholder returns following the company’s recent tactical shift.
At the start of this month, Berkeley said it would stop buying land and limit work-in-progress investment to current sales rates. The company said the move reflects subdued demand and a tougher regulatory backdrop.
Analyst Chris Millington said the changes are expected to weigh on earnings, with profit before tax forecast to fall by more than 20% between the 2026 and 2028 financial years.
He also said return on equity is expected to decline to around 7%, reducing the capacity for shareholder distributions.
Deutsche Bank’s target price was cut to 3,685p from 4,600p. The downgrade came against a last close of 3,364p.
Millington said the revised valuation reflects weaker near-term returns, while noting potential upside from Berkeley’s private rented sector (PRS) venture and any recovery in housing demand.
He said the new price target “balances depressed near-term returns, with potential upside from the PRS venture and a market recovery”.
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