Berenberg hikes target price on Derwent London

22nd Aug 2024 09:20

(Sharecast News) - Analysts at Berenberg raised their target price on property investment and development business Derwent London from 2,494.0p to 2,700.0p on Thursday, stating the group's improving outlook should drive performance.

Berenberg stated that while Derwent's portfolio fell in value in H124, the rate of decline had slowed, with the expectation now that values will stabilise over the next six months given base-rate cuts and rent rises due to an improving economic outlook and a continued supply/demand imbalance for prime London offices.

"Along with the rest of the UK REIT sector, Derwent London's share price has recovered since its low in February/March, but still shows a broadly flat performance year-to-date," said the German bank., which reiterated its 'buy' rating on the stock.

"However, its discount to NTA rating has narrowed marginally as NTAs have declined. Given we are only forecasting a further 1% NTA decline in H224, we think the current NTA discount rating of 23% is the actual discount now, and with our expectation for growth over the coming few years, we forecast this to narrow further to 15%.

Reporting by Iain Gilbert at Sharecast.com