Source: Sharecast
Berenberg said while trading conditions remain "challenging" for Grafton, illustrated by expectation for a 15% decline in profit this year, it maintained its positive view for three reasons.
"Firstly, we expect more favourable market conditions from 2025 – in terms of both volumes and pricing – driving a recovery in profit. Secondly, we note an attractive capital returns story, with Grafton returning about 8% of its market cap per annum, on an ongoing basis, through a mix of buybacks and dividends. Finally, we see upside risk from the group deploying its surplus capital into value-enhancing acquisitions," said Berenberg.
The German bank, which reiterated its 'buy' rating on the stock, also noted that Grafton trades on 18x and 15x its 2024 and 2025 earnings per share forecasts.
Jefferies cut its price target on real estate investment trust Life Sciences REIT from 45.0p to 36.0p following a visit to the group's Cambourne Science & Technology Park.
Jefferies said it had chosen to lower its earnings estimates on delayed option to purchase leasing due to political and economic uncertainty from FY24 into FY25, which was a timing issue.
However, Jefferies expects an under-supplied market of high-quality lab space to put upward pressure on rents, with the UK increasingly the "centre of excellence" for European Life Science businesses.
"We capitalise the FY25e covered dividend per share (1.80p) at 5% which gives a 36.0p price target (45.0p) with the divi subsidised out of net asset value and anticipating full cover in FY26," added Jefferies, which reiterated its 'hold' rating on the stock.
Reporting by Iain Gilbert at Sharecast.com
