The Sirius Real Estate Limited (LSE:SRE, JSE:SRE, OTC:SRRLF) share price, of around 87p, is “an excellent entry point” according to stockbroker Panmure Liberum, which today repeated a ‘buy’ recommendation.
Tim Leckie, Panmure Liberum analyst, in a note, said that a broader pullback in the UK real estate sector had dampened sentiments, but Sirius offered a favourable risk/return dynamic.
Specifically, Leckie highlighted that dynamics in the sector are more suited to the approach taken by Sirius to its property portfolio, compared to more passive property investors.
“Post Budget the UK looks set for a period of rates higher than previously anticipated,” the analyst said. “This makes passive, ‘market risk’ strategies centred on holding standing assets with little scope for cash flow enhancement less attractive, as it dampens the potential for capital appreciation and increases capital costs.
“Sirius is the champion of ‘property risk’, deliberately seeking out vacancy, reversion and repositioning / capex risk at higher yields then managing those opportunities into rental and cash flow growth.”
Panmure Liberum highlighted that the share currently trades with a price-earnings ratio of just over 10%, while repeating its ‘buy’ recommendation.
Pitched at 125p per share, the Panmure Liberum price target suggests nearly 30% upside to 88.75p.
Elsewhere, Peel Hunt analyst Mathew Saperia separately said that Sirius shares “offer an attractive return outlook … underpinned by a well-covered 6.0% dividend yield.”
Peel Hunt has a ‘buy’ recommendation and a 115p price target.