Derwent London PLC (LON:DLN) and Helical PLC (LON:HLCL) have been upgraded to ‘neutral’ from ‘underweight’ and to ‘overweight’ from ‘neutral’ respectively by analysts at JP Morgan as the bank revisited its view on the property market.
In a note on Friday, the broker said it was turning “more constructive” on the UK property market generally, although it also downgraded Shaftesbury PLC (LON:SHB) to ‘underweight’ from ‘neutral’ based on a “tough outlook” and Unite Group PLC (LON:UTG) to ‘neutral’ from ‘overweight’ on valuation grounds.
JP Morgan said that while the rollout of the coronavirus (COVID-19) vaccine left “room for optimism” in the second half of 2021, it was still “too early to go ‘all in’ on the retail reopening trade” as they expected “more operational pain to come”.
However, the bank said the UK market was snow “back on the radar”, highlighting that the country is making “good progress against its vaccination targets” and that the threat of a no deal Brexit had now subsided.
Analysts also said that if negative interest rates were to be introduced it would offer a “game changer” and potentially support a 25% upward swing in the capital value outlook for London offices over the next five years.
In terms of target prices, Derwent was increased to 3,200p from 2,850p and Helical was hiked to 485p from 460p, while Shaftesbury was cut to 550p from 900p and Unite was maintained at 950p.
Shares in Derwent rose 1.2% to 3,250p in mid-morning trading, while Helical climbed 1.5% to 385.5p, Shaftesbury was flat at 555p and Unite slipped 1.9% to 973.4p.