Liberum Capital has upgraded its rating for Primary Health Properties PLC (LON:PHP) following a recent fund-raising, which it believes places the recent FTSE 250-promoted group in a strong position to be a consolidator in the UK health property market.
The City broker has upped its stance on PHP to ‘buy’ from ‘hold’, given the upside to its unchanged 120p target price and the benefits of the placing.
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In a note updating forecasts following PHP’s recent £115mln equity placing, Liberum’s analysts noted that the fund-raise provides firepower to deliver the group’s around £155mln acquisition pipeline and is marginally accretive to net asset value (NAV), but dilutive to earnings in the current year.
They added: “The equity raise places PHP in a strong position to further consolidate the UK primary health property market, accelerate expansion in Ireland and drive further economy of scale benefits within the business.”
The analysts concluded that PHP offers long-term predictable returns with low relative risk, with the shares trading at a 9% premium to NAV, with a Price/Earnings of 22x and dividend per share yield of 4.8%.