Workspace Group PLC (LSE:WKP) faces a slower recovery than expected as a strategic repositioning weighs on near-term performance, leading Deutsche Bank to downgrade the shares.
Last week’s fourth-quarter update from the flexible office group showed a “challenging picture”, with like-for-like occupancy broadly flat at 82% despite some discounting.
Rents on a like-for-like basis fell slightly, highlighting continued pressure in a competitive market for flexible office space.
Deutsche's analyst Max Nimmo said enquiry levels and conversion rates remain relatively resilient, but added that management is prioritising longer-term positioning over short-term occupancy gains.
He noted that, rather than cutting prices aggressively to fill space, Workspace is aiming to "reposition itself as the value option" and improve monetisation of its platform.
However, this strategy is expected to take "even more" time and, in a competitive field, could weigh further on profitability and valuations in the near term.
Deutsche Bank's target price was cut to 400p from 480p and its stance was downgraded to 'hold' from 'buy', with the shares last trading at 350.6p.