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On Wednesday, Citi analysts upgraded Charter Hall Long Wale REIT (CLW:AU) stock rating from Neutral to Buy, while also increasing the price target from AUD4.00 to AUD4.40. The upgrade followed a positive evaluation of the company’s stable income stream, which is supported by a high-quality tenant base and a long weighted average lease expiry.
The analysts noted that despite previously expressing caution due to potential earnings downside from increased debt costs, they now recognize value in Charter Hall Long Wale REIT’s shares. This change in perspective is partly because the shares are currently trading at a 14% discount to the December 2024 Net Tangible Assets (NTA) of AUD4.62. Additionally, the analysts forecast a roughly 6.5% dividend yield over the next 12 months, which they find appealing in the context of a declining interest rate cycle.
Citi’s outlook is also bolstered by the expectation that asset values for Charter Hall Long Wale REIT may rise, potentially leading to a higher NTA. This would make the current discount to NTA even more attractive for investors. The analysts have adjusted their Earnings Per Share (EPS) forecasts to be 5% and 9% ahead of the consensus for the fiscal years 2026 and 2027, respectively.
The new price target of AUD4.40 implies that Charter Hall Long Wale REIT is valued at approximately a 5% discount to its NTA, according to Citi’s analysis. This revaluation reflects a more optimistic view of the company’s financial prospects and its position in the market.
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