MCS.L Share News (MCS)

(Sharecast News) - Analysts at Berenberg believe retirement home construction outfit McCarthy & Stone's trading will remain challenged, despite a "solid start" to its transformation plan.Berenberg noted that a slower second-hand homes market, particularly in the southeast of the UK, continued to present "significant headwinds" for McCarthy, dampening demand for what remains "a high-quality product".The German bank said McCarthy's turnaround plan, announced in September, was being hindered by a weaker second-hand market which had negatively affected demand for retirement properties, making its previous volume target "unachievable without significant price cuts.""Having initially assumed that these savings would be achieved on a somewhat straight-line basis, we have adjusted our phasing to reflect the likelihood of more back-end-loaded delivery," said Berenberg.As a result, the broker cut its full-year 2019 EBIT estimates for McCarthy by 11%, but made only "marginal changes" to its 2021 estimates as margin guidance had been maintained at roughly 15%."Although the transformation plan continues to make strategic sense, the dual uncertainties relating to the speed of delivery of the turnaround and the ongoing issues around the sale of freehold revisionary interests mean we continue to think there is better value elsewhere in the sector."Berenberg reiterated its 'hold' rating and 120p target price on McCarthy.