N Brown Group PLC (LON:BWNG) was downgraded to ‘hold’ from ‘buy’ by Peel Hunt in the wake of Thursday;s trading update due to the ongoing pressure on the retailer’s financial services division.

The City broker’s analysts also cut their target price for the stock to 150p from 200p and revised down their current year adjusted profit before tax forecast to £70.8mln from £84.1mln, following N Brown’s profit warning.

READ: N Brown issues double profit warning as sales slip

The analysts said their previous ‘buy’ case on the retailer was based on the flow of cost savings and a “solid” financial services business base, however, they think that it is no longer sustainable after today’s big drop in N Brown’s share price.

The company, which sells plus-size clothing and homeware, allows customers to pay for their purchases in instalments, but new regulations have been impacting its bad debt provisioning strategy.

The Peel Hunt analysts said that this year and next will see more of these regulatory headwinds, which, alongside lower margins due to heavy discounting, prompted the firm to issue a profit warning.

“We cannot retain our ‘buy’ recommendation and downgrade to ‘hold’, expecting the shares to lose much of the gains seen over recent months,” the analysts concluded.

N Brown shares topped the London fallers list on Thursday, down 24% to 107.80p