Investment bank Liberum has raised its price target price for Supermarket Income REIT PLC (LSE:SUPR) with this message: “We continue to think [its] asset base is undervalued.”
With that in mind, Liberum has moved its target price to 140p from 134p following the full-year 2021 results. That’s an 18% premium to the company’s share price of 119p.
In a note to clients, Liberum pointed out the real estate investment trust’s leases are largely inflation-protected. So, a 5% yield on the asset base plus “c3% RPI is an 8% return, before the benefits of leverage”, it pointed out.
It has also updated its calculations following the Sainsbury joint-venture option exercise, which it reckons “offers further upside if more stores are exercised, and provides an earnings kicker” from 2024.