Morgan Stanley upgrades Hammerson, downgrades Landsec
Sharecast – Hammerson was upped to ‘overweight’ from ‘equalweight’ and the price target lifted to 36p from 27p. The bank downgraded Landsec to ‘equalweight’ from ‘overweight’ and cut the price target to 650p from 750p.
MS noted that Hammerson has made significant restructuring progress and said it sees value in the shares at current levels. It added that Landsec’s net asset value valuation gap to British Land (LON:) is now at all-time wides – around 10pp which has never occurred over the last decade.
“We attribute this relative performance differential to British Land’s LTV increase at the recent FY results,” it said.
It also pointed to the fact that British Land has stated it will ‘continue to recycle out of mature assets’ and said it assumes assume this will mitigate the LTV soon enough.
More generally, the bank said: “UK balance sheets screen as sufficiently capitalised in the context of modest asset appraisals, while NAV valuation for many is close to or at all-time lows.
“We are alive to the fact that broader UK exposure and offices as a sub-sector are out of favour, but at current valuation the risk reward is compelling in our view.
“On the flipside, we see good reasons for sustained caution on Swedish stocks (Castellum, Fabege), retail REITs (Unibail, Klepierre) and highly levered names (Aroundtown).”
At 1250 BST, Hammerson shares were up 3.3% at 24.74p.
