Stifel Nicolaus analyst Denese Newton maintained a Hold rating on Segro plc (REIT) (SGRO – Research Report) today and set a price target of p740.00.
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Denese Newton has given his Hold rating due to a combination of factors impacting Segro plc’s overall performance and market position. Firstly, the company’s earnings per share (EPS) of 34.5p were aligned with expectations, driven by robust reversion capture and steady rental growth; however, the growth pace has slowed compared to previous periods. Secondly, the developments remain on track, though the rate of pre-letting has decreased significantly, indicating potential challenges ahead in securing tenants for new spaces.
Furthermore, Segro’s shares are trading at a 20% discount to the announced net tangible assets (NTA) for FY24, which is consistent with the broader UK REIT market and its peers. Additionally, the logistics market faces a finely balanced demand-supply situation, with vacancy rates edging higher and rental growth moderating. Despite stable yields, the macroeconomic uncertainties and the potential for limited yield tightening in the near term contribute to maintaining the Hold rating.
In another report released on February 3, HSBC also downgraded the stock to a Hold with a £6.85 price target.