Proactive Investors - Vistry Group (LON:VTYV) shares fell 5% to 791p this morning, hurt by a downgrade by UBS (LON:0R3T) to 'sell' from 'neutral'.
The Swiss bank is cautious that the recently presented business plan can be executed because it assumes record volumes (>20,000) for any single UK housebuilder to have ever delivered at a record level of ROCE of 40%.
The broker thinks finding sufficient "capital light" development opportunities with private rented sector (PRS) and affordable housing providers at that scale could be challenging, while current reported profitability levels are supported by fair value adjustments following M&A activity which it thinks overstates the economic returns to shareholders.
It also noted the plans include a high level of financial gearing, with average net debt of £400 million and £700 million of lend creditors, the highest gearing in the sector.
Added to a relatively high valuation, with the shares now trading at the top end of the sector range, UBS has taken a more cautious view.
On Tuesday, Jefferies also downgraded the stock, moving to 'hold' from 'buy'.
Shares in the FTSE 250-listed builder are down 13% over the past five days, but still up 23% this year.