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On Tuesday, Deutsche Bank (ETR:DBKGn)’s analysts revised the price target for Workspace Group Plc (LON:WKP:LN) shares, reducing it to £5.50 from the previous £6.70, while maintaining a Buy rating. The adjustment follows Workspace’s post-year end financial update, which highlighted both expected large space givebacks and a greater than anticipated impact from National Insurance contributions and refinancing rates. According to the bank’s analysis, these factors are projected to influence the company’s fiscal year 2026 earnings by approximately £7 million.
The financial institution’s analysts noted that the decrease in occupancy rates, as reported in Workspace’s fourth-quarter update in April, was not entirely unexpected. However, the combined effect of higher National Insurance contributions and refinancing rates necessitated a downward revision of earnings estimates and consequently the company’s valuation. The new price target represents a nearly 18% reduction from the previous target.
Deutsche Bank’s decision to adjust its price target comes ahead of a strategic update from Workspace’s new CEO, which is scheduled to be released along with the fiscal year 2025 results on June 5th. The analysts believe that revising estimates now is a cautious approach to ensure that the company’s medium-term strategic objectives are not overshadowed by short-term challenges.
Despite the lowered estimates, Deutsche Bank maintains a positive outlook on Workspace Group, citing that the new price target still implies a significant upside with an undemanding price-to-net tangible assets (P/NTA) ratio of over 30% and a price-to-earnings (PE) ratio of approximately 17 times. The analysts also highlight that Workspace is currently trading at a P/NTA discount of 45%, while other office sector stocks have re-rated into the 30% range, and the company offers a well-covered dividend yield of about 7%.
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