Foxtons slumps as Citi initiates stock at 'sell'

30th Jun 2015 10:01

Foxtons slumped 4% on Tuesday after Citigroup initiated coverage of the stock at 'sell' with a 215p price target.It said Foxtons has the strongest brand profile and margin performance of the three stocks it was examining in its note on UK estate agents. However, the company is largely focused on London, where Citi has concerns regarding end-market dynamics, given affordability issues which may curtail volumes."We also suggest there is limited scope for margin expansion and given management's organic growth plans there is also no consolidation optionality," said the bank, adding that the stock trades at a significant premium to peers.In the same note, Citigroup initiated coverage of Countrywide and LSL Property Group at 'buy' with 700p and 545p price targets, respectively.Countrywide is its top-pick in the sector. "This business offers investors the opportunity to invest in a scale operation with strong End Market Dynamics which continues to evolve organically as well as offering market Consolidation Optionality," the broker said.Analysts at Citi explained LSL came a close second on many points examined, as the group continues to benefit from an improving UK residential market and is expected to deliver improving operational metrics while trading at an attractive valuation.At 10:11, Foxtons shares were down 4.3% at 234.50p, while Countrywide was up 1.1% at 573p and LSL Property was up 0.1% at 387p.