On Tuesday, BofA Securities analysts elevated the stock rating of Eurocommercial Properties (ECMPA:NA) from Neutral to Buy.
The move comes as Eurocommercial's shares have lagged behind its industry peers, specifically the EPRA Europe Retail Index, by nearly 10% since January 2024. The company now trades at a 7.9% implied capitalization rate, which is approximately a 40% discount to its estimated 2026 Net Disposal Value (NDV).
The analysts who maintaining a price target of €27.00 highlighted that Eurocommercial Properties offers a compelling valuation when compared to its retail sector counterparts. On average, the retail coverage trades at a 6.5% implied cap rate and around a 23% discount to NDV.
Eurocommercial Properties stands out with its lower leverage, with a Loan-to-Value (LTV) ratio of 45% versus the retail average of 49%. Additionally, the company's portfolio of shopping centers is considered comparable to its peers.
The firm's assessment indicates a potential total shareholder return of 35% based on the €27 price objective, which has remained unchanged despite the upgrade. This assessment is grounded in the stock's current performance metrics and the broader market context.
The upgrade by BofA Securities reflects a positive outlook for Eurocommercial Properties, as the firm's analysis suggests that the stock is undervalued. This valuation gap presents an opportunity for investors, according to the firm.
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