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On Tuesday, Deutsche Bank (ETR:DBKGn)’s analysts revised the price target for Segro PLC (LON:SGRO:LN) (OTC: SEGXF) shares, reducing it to GBP8.00 from GBP10.00, while maintaining a Hold rating. The $11.8 billion market cap real estate company, which maintains an impressive 78.7% gross profit margin, saw its shares adjust following the first-quarter 2025 trading update, which prompted some concerns about Segro’s capital expenditure deployment targets for the year.
The bank’s analysts highlighted slower decision-making by occupants regarding pre-lets as a potential downside risk. This slower pace could impact the company’s ability to meet its capital expenditure goals. According to InvestingPro, Segro has maintained dividend payments for 46 consecutive years, demonstrating remarkable financial stability despite challenges. The unexpected retirement of Segro’s well-respected Chief Financial Officer, who was considered a likely successor to the CEO, has introduced some uncertainty about the company’s future leadership.
Despite these concerns, Deutsche Bank remains optimistic about Segro’s long-term structural growth. The firm’s high occupancy and retention rates, which support the potential for mid-single-digit growth in like-for-like (LFL) rents, were noted as positive factors. These strengths are expected to persist even if there is a temporary deceleration in the development pipeline.
Furthermore, the analysts believe that Segro is positioned to continue benefiting from its strategic initiatives. Contrary to broader market concerns about diminishing data centre demand, Segro is anticipated to secure a significant contract with a major hyperscaler. The company is also moving forward with its £1 billion joint venture with Pure DC to establish a fully-fitted data centre, which could contribute to its growth trajectory. InvestingPro analysis suggests the stock is currently fairly valued, with additional insights available in the comprehensive Pro Research Report, including 12+ more exclusive ProTips and detailed financial metrics.
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