Shares in Southern Cross plummeted again today as analysts cut their forecasts for the embattled care homes operator.

Britain’s biggest care homes company lost 58 per cent of its market value yesterday after it announced that it had failed to make a debt repayment and had an extra month to negotiate how to pay back a £46 million debt.

In early trading today, its share price went down by 26 per cent, from 34p to 96p.

Analysts at UBS maintained a “buy” recommendation on the stock, but slashed their target for its share price by almost 70 per cent to 235p. Goldman Sachs cut their target to 170p from 490p, while Morgan Stanley analysts reduced their target to 237p from 550p. Even house brokers Investec said that Southern Cross was “risky ... shares oversold” and also cut their target by over half, to 200p from 490p.

Southern Cross has been unable to offload the property attached to some recent care homes purchases as the property market has declined.

It is also suffering from lower occupancy rates than expected as more of its residents have died than predicted. As local authorities budgets are squeezed, they are less likely to increase fees each year – but staffing costs have increased as the minimum wage has gone up.

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