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On Thursday, Berenberg reiterated its Buy rating on Tritax Big Box REIT Plc (BBOX:LN) stock, maintaining a price target of £1.82.
The firm highlighted the company's potential for earnings growth, driven by its reversionary potential, which is expected to result in an approximate 8% compound annual growth rate (CAGR) in earnings per share (EPS) over the next three years.
Berenberg also pointed out the company's earnings yield on net tangible assets (NTA) of around 5%, which remains attractive despite the stock's performance this year.
Tritax Big Box REIT's shares have declined by 4% since the beginning of the year. Despite the downturn, Berenberg's analysis suggests that the company's shares are trading at a 10% discount to its NTA. This is coupled with an earnings yield of 5.4%, which the firm views as an opportunity for investors.
The analyst's commentary underscores the visibility of Tritax Big Box's earnings growth, which is expected to be robust due to the reversionary potential of its assets.
This potential refers to the ability to increase rental income as current leases expire and are renewed at higher rates, reflecting market conditions.
The firm's forecast of an attractive EPS CAGR of 8% over a three-year period is a testament to Tritax Big Box's strong position in the direct property market, which is said to be improving. The firm's outlook remains positive despite the recent underperformance of the company's shares in the market.
Investors and market watchers will likely keep an eye on Tritax Big Box REIT's financial performance in the coming quarters, to see if the company's earnings and stock price align with Berenberg's projections.
The reaffirmation of the Buy rating and the £1.82 price target reflects confidence in the company's future earnings capacity and growth trajectory.
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