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Investing.com - Kepler Cheuvreux downgraded Covivio (EPA:COV) from Buy to Hold on Thursday, while raising its price target to EUR62.00 from EUR58.00, citing limited upside potential following the stock’s strong year-to-date performance.
The French real estate company has delivered a total return of 29% year-to-date, significantly outperforming the broader EPRA index, which gained 6.5% during the same period. This rally follows Covivio’s stronger-than-expected first-half results and successful completion of its 2022-24 deleveraging program.
Covivio reported better-than-anticipated operational performance across all asset classes, with portfolio revaluation increasing 1.5% on a like-for-like basis. The company has also strengthened its balance sheet, reducing its loan-to-value ratio to 39.8% after dividend distribution.
Despite acknowledging Covivio’s portfolio and management quality, Kepler Cheuvreux expects performance to normalize, particularly in hotels and offices, creating potential for disappointment after the recent rally. The stock now trades closer to historical averages at -29.1% price-to-net tangible assets and 12.7x price-to-funds from operations.
The research firm also noted that most analysts maintain positive views on Covivio despite limited upside potential, suggesting the possibility of additional rating downgrades in the future.
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