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Investing./com -- Goldman Sachs upgraded Segro (LON:SGRO) to a "buy" rating, citing improving demand trends and potential upside in both standing and pipeline assets.
Jonathan Kownator, covering European real estate for Goldman Sachs, flagged that Segro , the largest U.K. and European REIT, has been the weakest performer in his coverage over the past year.
Kownator’s analysis, spanning roughly 90 pages, points to crisis-era valuations, similar to levels seen during the global financial crisis, driven largely by long-duration concerns despite otherwise constructive market fundamentals.
Property values are recovering across most markets, undersupply remains prevalent, and rental growth is solid.
Balance sheets are generally healthy, while secular trends, including the expansion of data centers, provide additional support, according to the report.
The upgrade follows Goldman Sachs’ refresh of estimates and price targets to reflect the latest macroeconomic conditions.
Weighted average cost of capital assumptions were increased by roughly 12 basis points on average due to higher interest rates. Segro’s new price target implies a potential upside of 17%, Goldman analysts said.