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On Monday, Deutsche Bank (ETR:DBKGn)’s analysts adjusted their outlook on Shaftesbury Plc ( SHB (HM:SHB):LN) (OTC:SHABF), reducing the price target to GBP1.75 from the previous GBP1.80. Despite the price target adjustment, the firm maintained a Buy rating on the stock. The revision comes after the evaluation of the financial implications following Norges Bank Investment Management’s acquisition of a 25% stake in Covent Garden.
The analysts at Deutsche Bank anticipate that the deal will yield approximately GBP4.5 million per annum in performance fees and administrative cost savings, which is expected to offset Shaftesbury’s overall administrative expenses, bringing them down to around GBP37 million for the current year. The firm also predicts that Shaftesbury will continue to seek additional cost-saving measures.
The proceeds from the transaction, amounting to GBP570 million, are set to be used for repaying the GBP67 million in loans from Canada Life, with around GBP25 million in cash already allocated for this purpose. This strategic financial management is projected to reduce the company’s net financing costs to roughly GBP43 million for the year, contributing to an estimated GBP82 million in underlying earnings for the financial year 2025.
Deutsche Bank also expects Shaftesbury to stay proactive in its acquisition strategy, incorporating an estimated GBP75-100 million per annum for opportunistic acquisitions. This approach aligns with the company’s intention to re-leverage its balance sheet up to a loan-to-value (LTV) ratio of around 20%, which remains at the lower end of its stated 20-40% target range.
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