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Investing.com -- Bernstein has upgraded Hammerson PLC to “overweight” from “underweight,” citing the company’s growth prospects and attractive valuation relative to retail peers.
The brokerage said the upgrade follows Hammerson’s partly equity-funded acquisition of the remaining stake in the Bullring, which was immediately 4% accretive to earnings per share (EPS).
While Hammerson remains more expensive than peers, with a FY26E EPS yield of 7.2% compared with 10.5% for Unibail-Rodamco-Westfield and 8.3% for Link REIT, Bernstein noted that the company’s growth profile has improved.
Hammerson’s FY24-29E EPS compound annual growth rate is now 3.5%, up from a previous forecast of negative 1.2%, compared with 0.3% for URW and 2.2% for LI, making it attractively valued versus Bernstein’s coverage, which has an average FY26E EPS yield of 6.9% and a five-year CAGR of 1.1%.
The upgrade reflects increased forecasts driven by the Bullring deal, lower refinancing costs, and potential further acquisitions.
Bernstein highlighted that Hammerson’s recent Eurobond issuance could allow future debt to be priced at lower coupon rates.
The brokerage also incorporates an assumption of annual investment in the group’s portfolio to generate additional income. Overall, EPS forecasts are now projected to rise by approximately 3% in FY26E and 26% by FY29E.
Retail, particularly prime assets, remains a key focus. Hammerson’s recent operating update showed UK footfall up 6% year-on-year, France 5%, and Dundrum 3%, all exceeding national benchmarks.
Like-for-like sales in the UK rose 4% over the summer, while leases signed were 29% ahead of previous passing rent and 15% above estimated rental value.
Bernstein said these results suggest operating performance should remain resilient despite ongoing consumer concerns ahead of the UK budget.
Bernstein also noted Hammerson has shifted toward a growth strategy, with three remaining joint ventures that could be consolidated.
While the research does not model these, Bernstein pointed to potential upside should the company pursue similar consolidation moves.