LONDON (Reuters) – Investment bank JPMorgan slashed its price target for China’s debt-hobbled property giant Evergrande Group to HK$2.80 from HK$7.20 on Friday, saying there was likely to be more negative news about its finances.
The bank also cut its recommendation to underweight from overweight.
“We believe the company will continue to see negative news flows on its liquidity risk (refinancing / lawsuits from suppliers / potential bond defaults),” JPMorgan said.
“While we think Evergrande will likely see a soft landing scenario, we think rerating will be unlikely in near future, until we have better clarity of an actual resolution.”
Evergrande, which has around $20 billion worth of international bonds, has seen its share price slump 85% over the last year and rating agencies have issued a flurry of warnings over the last couple of weeks that it could default.
(Reporting by Marc Jones, editing by Huw Jones)