Analysts at investment bank UBS have slashed Purplebricks’ share price target from 285p to 100p – the price at which Purplebricks launched in December 2015.
UBS also said Purplebricks might have to embark on another round of fundraising to bring in £100m.
The bank has specifically raised concerns about Purplebricks’ performance in Australia and America.
Purplebricks itself warned that it is performing behind expectations in both markets.
Earlier this year it downgraded its global revenue expectations for this year by £35m, and parted company with both its UK and US bosses, parachuting co-founder Kenny Bruce back into Britain.
In response to Purplebricks’ warnings in late February, £100m was wiped off its market value, with shares plunging almost 8% in a day.
In its new report, UBS said that Purplebricks Australia was expected to break even at the end of 2022, three years later than originally expected. Its US business might not break even until 2025.
UBS analysts said: “Operations in Australia and the US are characterised by having very limited visibility on the business’s development and break-even horizon – Australia keeps being postponed and losses in the UK are expected to worsen.”
They also said that changes to Purplebricks’ pricing structure in both Australia and the US “raised concerns about the future of online agents and the upfront fee model”.
The UBS report also notes that in the UK “momentum has worsened, market share gains have slowed and risks are skewed to the downside”.
UBS is forecasting revenues in Australia of £26m in 2020, but a pre-tax EBITDA loss of £12m.
UBS said that to fund these losses, Purplebricks is likely to have to raise £100m capital in the next financial year.
UBS’s report follows warnings from investment bank Berenberg that Purplebricks might have to get out of the Australian and US markets, for its business to survive in the UK.
Last month, Berenberg slashed Purplebricks from ‘buy’ to ‘sell’ and cut its target price for the shares from 470p to 80p.
Yesterday, Purplebricks shares were seemingly unaffected by the UBS report: its shares bobbed up about 3% during day, finishing at around 137p. They were as low as 118p about a fortnight ago – a long way from their high of 511p in August 2017.