Liberum Capital has raised its price target for Primary Health Properties PLC (LON:PHP), one of a number of changes to targets made in a big note on the UK Real Estate stocks in which it highlights diverging trends in the sector.
The City broker upped its target for the FTSE 250-listed healthcare facilities real estate specialist to 125p from 120p and reiterated a ‘buy’ rating on the stock. In late morning trading, PHP shares were changing hands at 116.4p each.
In a note to clients, Liberum’s analysts said: “Real Estate asset values are now evidently diverging with Shopping Centres -3%, London Offices +1% and Industrial +7% in the 6 months to June 2018.”
They added: “Equities historically lead direct market values and, thus much of this trend is already priced.
“Nevertheless the scale of outperformance in Industrial is marked and suggests upside risk to NAV forecasts.”
The analysts concluded: “Valuations in Retail appear to be in a precarious position with depressed transaction volumes compounding end-market structural pressure and peaking cyclical headwinds.”
They said their key picks “remain weighted to the Alternative asset uses (e.g. healthcare, storage, student, flexible work space etc.) where yields are higher (wrongly in our view), barriers to entry are higher and retained earnings are higher allowing surplus capital to be reinvested to drive growth.”