The downgrade comes even though the Beijing-based online real estate company reported solid results for the 2016 second quarter. But SouFun projected light full-year guidance.
While CLSA said the company's results were better than expected, the firm believes secondary brokerage momentum has stalled, the Fly noted.
Gross merchandise volume, or the total sales dollar value for merchandise sold over time, was down in the quarter. CLSA said the decline could continue into the second half of 2016.
Shares of SouFun were rising in mid-afternoon trading on Friday.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "hold" with a ratings score of C-.
Among the primary strengths of the company is its robust revenue growth -- not just in the most recent periods but in previous quarters as well. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.
You can view the full analysis from the report here: SFUN