On Tuesday, BofA Securities adjusted its stance on Shaftesbury Plc ( SHB (HM:SHB):LN) (OTC: SHABF), elevating the stock from Underperform to Neutral, while revising the price target downward to GBP1.35 from the previous GBP1.50. The revision comes in response to a perceived 19% potential total shareholder return based on the new price objective, following a 15% drop in the company's shares since the onset of 2024.
Shaftesbury Capital, which operates in the real estate sector, is currently trading at a 5.3% implied capitalization rate and a 45% discount to its estimated Net Disposal Value (NDV) for the year 2026.
This valuation is considered by BofA Securities to adequately reflect the company's prospects for rent growth, the cessation of asset value decline, and the anticipated low cash flow generation, which influences the Discounted Cash Flow (DCF) valuation metric used by the firm.
The consensus on Shaftesbury's earnings per share (EPS) for 2025 has been reduced by 15% over the past six months, addressing one of BofA Securities' prior concerns. The firm's forecasts are now 7% below the average street estimates for EPS and dividend over the period from 2024 to 2026. This represents a more moderate position compared to the 12% and 13% lower than consensus estimates for EPS and dividend, respectively, at the time of the first half of 2024 results in August 2024.
Shaftesbury's stock adjustment by BofA Securities reflects a recalibration of expectations in light of recent market performance and consensus estimate revisions. The new price target and rating are informed by the firm's analysis of the company's potential returns, valuation metrics, and earnings projections.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.