Panmure Liberum has slashed its price target on Unite Group PLC (LSE:UTG), the student accommodation landlord, by 36% and downgraded the stock to 'sell', citing a fundamental and potentially lasting deterioration in demand for purpose-built student accommodation.
The broker cut its target from 675p to 430p, against a share price of 502.5p, arguing that the company's earnings have further to fall and that the market has yet to fully price in the structural risks now facing the sector.
At the heart of Panmure's bearish case is a change in the incentives driving university attendance in the United Kingdom.
Since 2022, reforms to student debt repayment terms have shifted a greater burden onto graduates at a time when real wages have stagnated and employment prospects for new graduates have weakened.
The broker estimates that 1.7% more students each year are now choosing to study from home rather than move into student accommodation.
The consequences are showing up in Unite's operating data. UK direct-let occupancy has fallen 20% over two years at an accelerating rate, while presales for the 2026/27 academic year are down 3% and nomination agreement volumes are down 4%.
Panmure Liberum said it had little confidence in Unite's own guidance after yet another earnings reduction, and argued that the company's revised earnings per share guidance of 41.5p to 43p for 2026 still carried downside risk if net rental income growth turned negative.
The broker also questioned the company's capital recycling strategy, warning that disposals of weaker sites are unlikely to achieve the guided yield range of 5.5% to 6.5%, making earnings-accretive reinvestment of sale proceeds difficult.
Looking further out, the broker noted that the 18-year-old population will begin declining from 2029, with a projected 20% fall in higher education demand through to 2040, compounding the structural pressures already weighing on the sector.
In afternoon trading, the shares were off 2% at 2.1% at 493.2p.