RBC Capital downgrades Hammerson on valuation

16th Oct 2019 13:50

(Sharecast News) - Hammerson was in the red on Wednesday as RBC Capital Markets downgraded its stance on shares of the shopping centre owner to 'sector perform' from 'outperform' on valuation grounds.
RBC said that following the 45% total return from the shares since mid-August, the share price multiples no longer factor in more than a reasonable bear case.

"Hammerson's share price discount to its last reported EPRA NAV/share reached a low of 70% (15/08/2019) following its 1H2019 results, but has fallen back to 56% following a 47% rise in its share price," RBC said.

"While such a discount is still higher than its historic average, so are the risks from its elevated financial gearing at a time of significant stress and uncertainty in UK retail property markets, in our view."

The bank also said it expects the current loss of demand supply tension in UK retail property markets resulting from tenant failures and restructurings to continue to dent the operating performance of shopping centre landlords in the near term, irrespective of the quality of their properties and operating platform.

RBC maintained its 290p price target on the stock.

At 1350 BST, the shares were down 3.8% at 310p.