Story
SEGRO Price Target Raised Nearly 30% by Kepler Cheuvreux on Upgraded 'Buy' Rating
Summary
Kepler Cheuvreux upgraded UK warehouse owner SEGRO Plc to "buy" from "hold" and increased its price target to 1,010 pence, arguing the company's shares are undervalued even without a potential takeover.
Analysts at Kepler Cheuvreux have upgraded UK warehouse landlord SEGRO Plc (LON:SGRO) to "buy" from "hold," asserting that the company's intrinsic value is not fully reflected in its current stock price.
The Upgrade in Detail
In a note to clients, the brokerage raised its price target on SEGRO shares by nearly 30%, moving it to 1,010 pence from the previous 780 pence. The upgrade is based on a renewed confidence in the company's long-term earnings potential, supported by what Kepler Cheuvreux described as greater management disclosure.
The firm argued that recent speculation about potential takeover interest from logistics giant Prologis has skewed investor focus toward a possible acquisition price rather than SEGRO's standalone value. Kepler stated it would not recommend accepting any takeover offer below its new 1,010 pence target.
Valuation and Outlook
AdKepler Cheuvreux's higher valuation stems from its ability to extend financial forecasts through 2035, thanks to enhanced company disclosures. The brokerage's analysis, based on both discounted cash flow and net asset value, points to significant upside.
The firm projects SEGRO will deliver earnings per share of approximately 50 pence by 2030 and 56.5 pence by 2035. This represents a compound annual growth rate (CAGR) of roughly 6% from 2025. Kepler believes that even if a deal with Prologis never materializes, SEGRO shares should gradually outperform as the market recognizes this underlying value.
Market Reaction
Following the analyst note, SEGRO shares were little changed in London trading, holding at around 884 pence. This performance was broadly in line with the wider FTSE 100 Index. Kepler's new target price implies a potential upside of approximately 14% from the stock's current level.
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