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On Wednesday, Goldman Sachs revised its stance on Hammerson Plc (LON:HMSO), upgrading the company’s shares from Sell to Neutral. The adjustment comes alongside a reduction in the price target to £2.55, a decrease from the previous target of £2.73. The move by Goldman Sachs reflects a recalibration of expectations for the UK-based property development and investment company.
Jonathan Kownator, an analyst at Goldman Sachs, cited an increase in the Weighted Average Cost of Capital (WACC) to 6.38%, up from 6.19%, as a primary reason for the price target adjustment. This change accounts for the negative impact of rising interest rates on the company’s valuation. Despite the lower price target, the upgrade to a Neutral rating indicates a shift in the investment firm’s outlook.
Hammerson’s stock performance over the past month has shown a lag compared to other companies in the UK and European real estate sectors, trailing by approximately 7%. However, Goldman Sachs now sees a marginal potential upside of around 1% for Hammerson’s shares, as opposed to the 17% average upside projected for their real estate coverage universe.
The analyst’s comments highlight the underperformance of Hammerson’s shares in relation to the broader market and suggest that the current price more accurately reflects the firm’s valuation in light of the changing economic environment. The new price target of 255p represents a modest downward revision, aligning with the updated WACC figure and interest rate considerations.
Investors and market watchers will take note of this updated assessment from Goldman Sachs as they evaluate Hammerson’s position within the real estate sector and adjust their expectations for the company’s financial performance and stock trajectory moving forward.
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