Incannex Healthcare stock tumbles after filing $100M offering
On Monday, HSBC analysts revised their stance on Primary Health Properties Plc (LON:PHP:LN), downgrading the company’s stock rating from ’Buy’ to ’Reduce’. The firm also adjusted the price target to GBP 0.77, a decrease from the previous GBP 1.13 target.
The downgrade was driven by concerns about valuation pressures on the company’s property portfolio. HSBC cited the impact of rising bond yields, which the analysts believe will continue to push property yields higher. Additionally, the firm noted that PHP’s lease profile has shortened to below 10 years for the first time, presenting another challenge to property valuations.
HSBC’s analysis suggests that PHP’s shares are trading at a 12% discount to the spot EPRA Net Tangible Assets (NTA) per share. However, the firm anticipates a negative return on capital employed (ROCE) compared to the weighted average cost of capital (WACC) spread over the next decade. This forecast implies that, on a relative basis, the shares may be overvalued.
The new price target of 77 pence represents an approximate 16% downside from the previous target, leading HSBC to recommend a reduction in holdings of PHP’s shares. The analysts expect that the risks of property valuation declines will persist as high bond yields continue and lease lengths shorten, potentially impacting PHP’s financial performance.
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