On Tuesday, Citi updated its outlook on Segro PLC (SGRO:LN) (OTC: SEGXF), a real estate investment trust, by raising the price target to £11.49 from the previous £10.69. The firm reiterated its Buy rating on the stock, signaling confidence in the company's growth potential.
Segro, which specializes in warehousing and light industrial property, is anticipated to benefit from the ongoing evolution of the real estate market. The company is well-positioned to capitalize on the structural rental growth driven by the expansion of online retail, increased demand for supply chain resilience, urbanization, and the growing need for data centers.
Citi's analysis suggests that Segro's portfolio could achieve a like-for-like annual rental growth of 7% or more in the long term. This growth trajectory is expected to lead to a 35% increase in the value of the company's property portfolio. Furthermore, the firm forecasts a 53% surge in earnings per share (EPS) from 2023 to 2028, bolstered by the completion of developments and potential future acquisitions.
The analyst's commentary highlighted the potential for Segro's shares to revert to high market multiples experienced during bull markets, as cyclical confidence returns. This scenario could provide additional upside to the investment. With the new price target, Citi indicates an estimated total expected return of approximately 32% for Segro's stock.
InvestingPro Insights
As Segro PLC (OTC: SEGXF) is poised to navigate the evolving real estate landscape, InvestingPro data complements Citi's positive outlook with some key metrics. The company's market capitalization stands at a robust $15.48 billion, reflecting the scale of its operations. Despite a challenging past performance with a negative P/E ratio of -43.73, the adjusted P/E ratio for the last twelve months as of Q4 2023 indicates a more favorable valuation at 34.67. Additionally, Segro has demonstrated solid revenue growth of nearly 12% over the same period, underscoring its potential in a dynamic market.
From an InvestingPro Tips perspective, the company's commitment to shareholder returns is evident, having raised its dividend for 9 consecutive years and maintained payments for 45 years. Analysts also predict that Segro will be profitable this year, providing a positive outlook for potential investors. For those looking to delve deeper into Segro's financial health and future prospects, InvestingPro offers several additional tips, including insights into the company's sales trends and liquidity concerns. Use the exclusive coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and unlock a wealth of financial wisdom with more than 10 additional InvestingPro Tips available for Segro.
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