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On Monday, Morgan Stanley (NYSE:MS) analyst Bart Gysens upgraded shares of Unibail-Rodamco-Westfield (URW:NA) (OTC: UNBLF) from Underweight to Equalweight, setting a new price target to €85.00, up from the previous target of €80.00. The stock is currently trading near its 52-week high of $89.73, having delivered a strong year-to-date return of 15.33%. Gysens highlighted the stock’s approximately 8.5% dividend yield expected for 2028, which is supported by a solid 8x targeted net debt to EBITDA ratio for the same year. The new price target suggests that the stock is positioned more centrally within the firm’s coverage universe. According to InvestingPro analysis, the company appears slightly undervalued based on its Fair Value calculations.
Gysens noted that the stock’s potential is underpinned by a low 2028 price-to-earnings (PE) multiple of around 7.5x, though the current P/E ratio stands at 73.98x. Despite acknowledging the company’s mixed history with capital allocation and execution of commitments, Gysens believes the stock’s valuation may appear attractive to certain investors. The company maintains healthy liquidity with a current ratio of 1.38, and has demonstrated strong revenue growth of 13.84% over the last twelve months. The upgrade reflects an anticipation of a total net asset value (NAV) based return of approximately 10%, which accounts for expected rental growth offset by yield expansion.
The analyst explained that the return profile is consistent with a circa 10% NAV discount based on the stock’s trading patterns. However, due to the uncertain market conditions, Unibail-Rodamco-Westfield’s high leverage, and the company’s historical performance, Morgan Stanley has applied a wider discount of 25%. This adjustment underpins the new price target of €85.00.
The report by Gysens also pointed out that while the dividend yield looks compelling, the attractiveness is tempered by the group’s track record. The upgrade to Equalweight from Underweight by Morgan Stanley suggests a neutral stance on Unibail-Rodamco-Westfield’s stock, indicating that the firm’s analysts see the company’s stock performance as likely to be in line with the broader market or the sector average.
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