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Assura and Unite downgraded to ‘Hold’ by Liberum as orderly Brexit upside priced into sector

In a note on the real estate sector, Liberum said going into results season, it saw “modest [net asset value] upside risk to the Industrial REITs and Unit, and downside risk to our Retail [2019 fiscal year] NAV forecasts”
Unite accommodation building
Despite the downgrade, Liberum said Unite still offered “one of the best total return prospects in the sector”

Assura PLC (LON:AGR) and Unite Group PLC (LON:UTG) have been downgraded to ‘Hold’ from ‘Buy’ by broker Liberum as analysts said most of the upside from an orderly Brexit had been priced into the stocks.

In a note on the real estate sector, Liberum said going into results season, it saw “modest [net asset value] upside risk to the Industrial REITs and Unit, and downside risk to our Retail [2019 fiscal year] NAV forecasts”.

READ: Assura encouraged by NHS long term plan

Analysts added that while there could still be a potential value trade in the sector from “the extent to which equity markets have over-priced a correction in Retail values for the majors”.

“While we believe share price performances have been driven by the increased likelihood of an orderly Brexit, it could be equally argued that the probability has skewed towards both extreme outturns. Given this possibility, plus the fact we identified ~15% share price upside across the sector in the event of an orderly Brexit it is difficult to see significant share price upside from here.”

READ: Student accommodation firm Unite Group says full-year rental growth on track

For Unite, Liberum said there was now “insufficient upside” to its 950p target price to justify the ‘Buy’ rating, although added that it still considered the stock “one of the best total return prospects in the sector”.

Assura meanwhile was downgraded following recent share price growth, but the broker said it still believed the stock offered “attractive uncorrelated income returns, given its Govt. backed long-let assets and growing market share”.

Liberum also maintained its Assura target price at 66p.

In early morning trading Friday, Assura shares were down 0.5% at 58.6p while Unite shares were down 0.5% at 904.5p.

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January 22 2019

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