AlphaValue announced on Monday that it had upgraded its rating on Nexity shares to 'sell' from 'reduce', and lowered its target price to 16.5 euros from 23.2 euros.
In a research note, the analyst explains that, in his opinion, investors tend to underestimate the adjustment that the French property development sector is currently undergoing, a movement similar to that experienced by other European countries, at a time when there are no signs of a turnaround in interest rates before the second half of 23.
To be clear, we are very concerned about the 2024-25 horizon and are further reducing our EPS forecasts", he adds, judging that the 8% operating margin achieved last year will not be repeated this year.
According to AlphaValue, Nexity will have to arbitrate between its volume of activity and its level of operating profitability in order to keep its results afloat.
The intermediary also considers that the dividend of 2.50 euros per share paid in respect of the 2023 financial year does not seem any more sustainable.
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A leading integrated player in French real estate, Nexity covers the full range of real estate sales and services offered to individuals, businesses, institutional investors, and local communities, accompanying them throughout the real estate process. Net sales break down by activity as follows:
- sale of new homes (68.9%). The group is also involved in building land allotment and urban regeneration activities (Villes & Projets);
- real estate management services (20.4%): residential property management, student residence management, consulting and real estate transaction services (for individuals, businesses, and investors), network marketing of real estate leasing investment products, management, promotion, and development of real estate franchise networks, etc.;
primarily activities related to urban renewal (Cities & Projects);
- sale of commercial real estate properties (10.7%): sales of office buildings, skyscrapers, commercial complexes, logistics platforms, businesses and hotels.
France accounts for 98.6% of net sales.
NEXITY 
