JPMorgan cuts Charter Hall stock rating to neutral, retains target

Published 06/03/2025, 13:48
JPMorgan cuts Charter Hall stock rating to neutral, retains target

On Thursday, JPMorgan analysts revised their stance on Charter Hall Group (CHC:AU) (OTC: CTOUF), downgrading the stock from Overweight to Neutral. They maintained their price target at AUD17.00, despite the company’s recent positive performance and upgraded earnings guidance for the fiscal year 2025.

Charter Hall Group had announced an increase in its FY25 operational earnings per share (OEPS) guidance from approximately 79 cents per share to 81 cents per share, a 2.5% rise, which indicates a 6.9% growth on the previous corresponding period. This earnings growth is notable as it comes with only modest growth in assets under management (AUM). The improved forecast is largely attributed to an enhanced funds management (FM) EBITDA margin, which benefited from around $8 million in permanent cost savings, approximately a 12% reduction in costs. Notably, the updated guidance does not include any performance fees.

Following the release of its half-year results, Charter Hall’s stock experienced a favorable reaction, surging by 11.0% and significantly outperforming the real estate investment trust (REIT) sector, which saw a decline of 3.8%. This performance established Charter Hall as the second-best performing REIT during the reporting season.

The JPMorgan analysts also referenced a recent upgrade they had made to Goodman Group (GMG), which was raised to Overweight after a pullback post its capital raising. The analysts’ decision to downgrade Charter Hall reflects a strategic shift in preference based on relative value, following Charter Hall’s period of robust outperformance. They are now favoring Goodman Group over Charter Hall in the REIT sector.

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