HSBC gave a lift to British Land PLC (LON:BLND) shares on Wednesday, upgrading its rating to ‘buy’ from ‘hold’ albeit after cutting back its price target for the stock after recent results.
The global bank reduced its target for the FTSE 100-listed real estate group to 667p, down from 678p previously, with the stock changing hands at 588.6p each, up 2% on Tuesday’s closing price.
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The bank’s analysts said: “As with all of our UK real estate coverage, our target price is weighted (75%) in favour of price/book to reflect the frequency of valuation evidence in the UK market.”
They added: “Although evidence to date shows stability in values and rents, we struggle to see how a post-Brexit 2019/20 London office market can improve materially from current levels.
“However, the combination of BLND’s re-rating initiatives and the significantly deep P/B (price-to-book) discount is attractive, in our view.”
The HSBC analysts said they think British Land offers a better investment proposition than its closest peer Land Securities PLC (LON:LAND).
However, at this point in the cycle and with known economic concerns imminently ahead, they find it hard to be outright bullish.
That said, the analysts added, they see British Land offering better UK real-estate market optionality than Land Securities due to the combination of the company’s re-rating initiatives, its London campus holdings and the significantly deep P/B discount being attractive.