Shares in Purplebricks start a new week of trading after sharp falls on Friday, prompted by analysts downgrading the business by over 80%.

Berenberg slashed its price target for Purplebricks shares from 470p to 80p – below the price at launch on the stock exchange at the end of 2015.

Investment analysts at the Hamburg-centred bank downgraded the stock from ‘buy’ to ‘sell’.

The shares fell from 133p to as low as 122.6p, before recovering to finish on Friday at about 130p.

In a note to investors headed “The Icarus of Solihull”, Berenberg said that midlands-headquartered Purplebricks had “flown too close to the sun”.

It pointed to slowing growth in Purplebricks’ UK market, saying it was “running out of steam”, and burning through £7m of marketing costs a month.

Berenberg also said that mounting losses in America and Australia had revealed the limitations of the pay-upfront fee model.

Berenberg said: “With slowing growth and accelerating cash burn, we believe the group risks being forced to raise additional equity (at a significant discount to last summer’s 360p raise) or reduce marketing spend and abandon the Australian and US operations.”

Purplebricks launched on the AIM market in December 2015, with shares at £1.

The shares went on to hit a high of 511p in August 2017. Last year the price peaked at about 490p.

However, in February, Purplebricks warned that it would not meet its revenue forecasts this year because of difficulties in its Australian and US markets.

It also announced the departures of both its UK and Australian chief executives.

Shares responded then by tumbling over 35% to 125p.

With the share price once again hovering at about that level, it is nevertheless looking far healthier than that of the UK’s biggest high street agent.

On Friday, shares in Countrywide went down again to finish at a dismal 7.3p – falling despite a ‘buy’ recommendation in the same Berenberg 75-page report on UK estate agents. Berenberg said Countrywide was “investible again”.

However, at the same time Berenberg cut its target price to 10p, from 95p.

Berenberg also upgraded Foxtons to ‘hold’ from sell’, and lifted its target price to 60p. Foxtons’ shares also fell in price, down about 1% to 63p.

On LSL – owners of Your Move, Reeds Rains, and Marsh & Parsons – Berenberg reaffirmed its ‘hold’ rating, and raised the target from 220p to 250p.

Berenberg’s report was gloomy about the estate agency sector in general, saying there is unlikely to be any material reversal in the short term “rough” environment.

It said: “The changing affordability dynamics in the UK housing market have resulted in a contracting fee pool as the secondary market has stagnated.

“Alongside general market weakness, the emergence of the online/hybrid model has placed additional pressure on fees.

“We do not anticipate a material reversal of these fortunes in the short term, and forecast the transactional fee pool to continue to decline by 1% per annum.”