Stockbroker Shaw Partners expects another McGrath Estate Agents downgrade after it has already missed its targets for the first half of the year.
"We have never liked the stock, disputed the "stickiness" and "defensive" nature of rent rolls," its savage note said.
Its analysts have downgraded the share price of McGrath to as low as 22 to 25 cents, Fairfax Media reported.
It said McGrath management had "zero credibility."
Its note to clients was titled Titanic. McGrath shares rose in morning trade to 54 cents today, up 3 cents.
"When you have mass exodus of agents something stinks internally and of course there are the external structural challenges," its note says.
"The 'corporate' angle is likely to keep the stock at higher levels than it should be, use this as a chance to sell.
"Company looks set to do $4 million to 4.5 million in EBITDA, being generous and implying a 40 to 60 per cent improvement on the first half," its note said.
"The cost cuts have gone as far as they can while leaving the company with the resources to benefit from market improvement," Shaw said.
Bell Potter which underwrote the McGrath float at an earning multiple of 8.8 (to enterprise value) in the $2.10 IPO price has moved to a "sell" recommendation.
"In our view the lack of a leadership team and also options for the company (outside of privatising) support this recommendation," Bell Potter said.
Without spending a cent, John McGrath resumed defacto leadership of the company this week amid board and company tumult.
Key sales staff and a big private shareholder have backed him to turnaround the company he founded 30 years ago, perhaps by taking it private.
