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Hammerson weak as Stifel cuts stance to ‘sell’ from ‘hold’ after reducing estimates, target price due to planned disposals

The US broker's analysts pointed out that Hammerson has identified £900mln of potential asset sales, of which they assume £500mln will be completed during full-year 2019

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Stifel reduced its target price for the FTSE 250-listed firm to 300p from 340p, with the shares currently trading at 335.20p

Stifel has downgraded its rating for Hammerson PLC (LON:HMSO) to ‘sell’ from ‘hold’ after cutting its estimates and target price as a result of the planned disposals by the real estate group.

The US broker reduced its target price for the FTSE 250-listed firm to 300p from 340p, with the shares currently trading at 335.20p, down 3.6% on Thursday’s close.

READ: Bullring owner Hammerson says 2018 was 'tough' as it posts annual loss

In a note to clients, Stifel’s analysts pointed out that Hammerson has identified £900mln of potential asset sales, of which they assume £500mln will be completed during full-year 2019, in line with the company's target.

They then expect a further £200mln per annum in the following two years, with proceeds financing capex and reducing net debt.

However, the analysts said; “In reality, it may prove challenging to execute the planned disposals in a timely manner and at a reasonable price relative to book, given the current market conditions and structural headwinds UK retail continues to face.”

They assume the disposals are completed at an average 10% discount to book value to reflect this.

The analysts said the primary risk to their negative investment thesis is M&A activity, if a surprise bidder were to emerge for the company, although they added that none spring to mind.

Quick facts: Hammerson

Price: 19.045 GBX

LSE:HMSO
Market: LSE
Market Cap: £319.63 m
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