Unite Group: Deep NAV Discount, Earnings Visibility, and Disciplined Capital Allocation Support Medium-Term Buy Thesis

Analyst Ana Escalante from Morgan Stanley maintained a Buy rating on Unite Group plc and keeping the price target at p700.00.

Ana Escalante has given his Buy rating due to a combination of factors related to Unite Group’s valuation and earnings outlook. Despite a slower reservation pace for the 2026/27 academic year, current bookings still align with management’s guidance for occupancy and like-for-like rental growth, suggesting that core operating performance remains resilient. Management has reiterated its EPS guidance for FY2025, which underpins earnings visibility and supports confidence in future cash flows. In addition, the decision to cancel a development that no longer meets return thresholds, coupled with a £100 million share buyback program, signals disciplined capital allocation and a proactive approach to enhancing shareholder value.
A key pillar of Escalante’s positive stance is the significant discount of the current share price to net asset value, with Unite trading at around a 43% discount despite management targeting 8–10% total accounting returns. She argues that even a modest improvement in the demand environment could translate into better fundamentals and a material re-rating of the shares, while the downside appears limited at these valuation levels. Although she recognizes the absence of a clear near-term catalyst and notes that other Overweight-rated names may offer better short-term upside, Escalante views Unite as an attractive medium-term opportunity. Overall, the combination of discounted valuation, confirmed guidance, and prudent strategic decisions leads her to maintain a Buy recommendation.

In another report released on January 5, Citi also maintained a Buy rating on the stock with a £9.06 price target.