The US bank cut its stance on the FTSE 250-listed firm to ‘neutral’ from ‘overweight’ with a reduced target price of 410p, down from 610p previously, with the shares currently trading at 344.80p, 3.7% below Friday’s closing price.
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The bank slashed its target price for Capital & Regional to 3,200p from 5,300p, with the stock currently trading at 2,958p, down 0.6%; it chopped its target for Shaftesbury to 950p from 1,150p, with its shares changing hands at 837.50p, down 0.2%.
It also cut target prices across its UK real estate coverage, aside from for warehousing specialist Segro PLC (LON:SGRO) and student accommodation firm Unite Group PLC (LON:UTG) which both had their targets raised.
In their note to clients, JPMorgan’s analysts said: “We expect 2019 to be another difficult year for European Listed Property, and we reiterate our preference for subsectors with the lowest risk to rental growth and property valuations.”
They think the narrative this year will revolve around four key themes: Firstly, that yields look set to rise and act as a headwind; secondly, they think leverage will be in focus, but not just LTV (loan to value), as ND/EBITDA (net debt/underlying earnings) becomes more relevant as rates rise.
Thirdly, the analysts pointed out that there is no end in sight for retail property headwinds and said they worry a perfect storm is brewing.
And fourthly, they added, Brexit will dictate UK real estate share price performance at least through the first quarter of 2019, although even in the event of an orderly transition they think valuation follow through will be limited.