Morningstar has started its review on Australian property developer, Ingenia Communities (ASX:INA), handing it a ‘medium’ uncertainty rating.

The brokerage sees lower development risk in the company compared to its counterparts, and has estimated a fair value of A$3.9 per security.

It also predicts a 15% growth at a compound annual growth rate (CAGR) in the company’s earnings before interest, taxes, depreciation and amortization (EBITDA) over a span of five years.

Additionally, Morningstar expects Ingenia’s sales to grow at a CAGR of 14%, attributing this growth to revenue increases from the completion of new land lease communities.

However, it forecasts a CAGR of only 3% in revenue over the next five years, slightly below the expected rise in costs leading to a decrease in EBITDA margins.

Analysts at Morningstar also reported that Ingenia lacks the maintainable competitive advantages necessary to support an economic moat.

The shares of the company had fallen 9.2% year to date as of the most recent close.

Ingenia Communities is an Australian property developer specializing in commercial and residential properties.