Berenberg downgrades Empiric Student Property to ‘hold’
Analysts at Berenberg downgraded real estate firm Empiric Student Property from ‘buy’ to ‘hold’ on Wednesday, stating that normalisation had been delayed.
Berenberg said Empiric’s first-half results highlighted not only the progress the company had made in refining its portfolio but also operational risks that were “increasingly likely” to affect its full-year performance in 2022.
“The current booking rate stands at just 70%, less than six weeks ahead of the new academic year,” said Berenberg. “As such, while we expected the booking cycle to be back-end-loaded, there is now the very real risk that higher vacancy rates will persist, delaying the company’s operational recovery from Covid-19.”
The German bank, which kept its 100.0p target price on the stock unchanged, also added that Empiric’s rebased dividend, coupled with a valuation in “the upper quartile of its long-term range”, may present a headwind for the company in light of its income-biased shareholder register.
“With the shares up by circa 30% since we upgraded to ‘buy’ in March 2021, near-term earnings lowered, the dividend rebased and shares now at our price target we lower our recommendation to ‘hold’,” concluded Berenberg.