Bullish indicating open at $55-$60, IPO prices at $37
On Thursday, UBS analysts downgraded shares of real estate company Hammerson Plc (LON:HMSO:LN) (OTC:HMSNF) from Neutral to Sell, while also reducing the price target from GBP3.05 to GBP2.45. The downgrade comes after Hammerson’s stock experienced an 11% decline following the announcement of their full-year 2024 results, which showed a 5% increase in EPRA earnings in the UK.
Zachary Gauge from UBS cited several reasons for the downgrade and price target reduction. First, he pointed out that there is limited scope for margin improvement in the near-term for Hammerson. Additionally, he noted that the potential for near-term improvement from organic and external growth seems limited for the company.
Another factor influencing the downgrade is the performance of Hammerson’s low yielding French assets. These assets are expected to create a drag on the equity returns required for a UK listed company, especially after the benefits of the low coupon Euro bonds mature in 2027.
UBS’s new price target of GBP2.45 represents a 20% decrease from the previous target. The firm’s analysts believe that the combination of these factors will likely lead to further underperformance of Hammerson’s stock in the market.
The downgrade and revised price target by UBS reflect a cautious outlook for Hammerson’s financial performance and stock valuation in the near future.
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