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Investing.com - JPMorgan has upgraded Charter Hall Long Wale REIT (ASX:CLW) from Underweight to Neutral and raised its price target to AUD4.30 from AUD3.90, citing better-than-expected financial results and positive outlook.
The property trust delivered FY25 operating earnings of $178.6 million (25.0 cents per share), aligning with guidance though slightly below JPMorgan’s forecast of $180.2 million (25.2 cents per share). More significantly, CLW’s FY26 EPS guidance projecting 2% growth sits approximately 3% ahead of consensus expectations.
Two key factors drove the positive FY26 outlook: CLW’s acquisition of $229 million in gross assets year-to-date at an average passing yield of 9.1%, and proactive hedging activity during the second half of FY25 that increased FY26 hedge levels to 72% while maintaining an average hedge rate of just 2.6%.
Property valuations and net tangible assets remained essentially flat for the half, consistent with JPMorgan’s assessment that the property cycle has reached its bottom. The firm has upgraded its FY26-28 EPS forecasts by approximately 3-5%, driven by accretive acquisitions and effective hedging strategy.
While CLW’s weighted average cost of debt of 4.0% remains below market and could pose a potential earnings challenge, JPMorgan notes that above-peer gearing is less concerning now that valuations have stabilized.
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