Belvoir shares have 66% upside according to broker finnCap, which has a 365p price target on the lettings and estate agency business and says it is significantly undervalued.
Worries over the housing market in 2002 have seen the share price drift by 31% from their peak, but the above-average growth track record, lower risk profile and stronger cash flow characteristics supported by the franchise model underpin its target, said the broker.
“Although 2022 will likely see more normal housing transaction activity, there is still very strong potential to grow Lettings (57% of gross profit) and Financial Services (19% of gross profit),” said finnCap.
“Rents are rising, with supply restricted, and financial Services benefits from remortgaging activity when sales are quieter.”
“On an 8.5% free cash flow yield, a 4.0% dividend yield and our conviction that Belvoir’s management team will continue to drive the group forward, we see significant share price upside. “
Shares rose 1.6% to 226p.