Broker snap: Great Portland overly punished, JPM says
Nov 06, 2009
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Property stocks were wanted Friday morning, with sentiment lifted by SEGRO's sale of the Great Western Industrial Park in Southall, West London, that it inherited in the Brixton Estates merger.
JP Morgan (JPM) has added to the sector's positive vibe with an upgrade for mid-cap player Great Portland Estates, which it now rates as 'overweight' having previously been neutral on the stock.
The primary reason for the rating change is the 15% fall in the share price since it peaked in mid-September; JPM notes that the stock has also underperformed its closest peer, Derwent, by 22% in the second half of the year and lagged the sector by 19% over the same period.
'We believe the stock has been punished for degearing at the bottom of the direct market, and concern over the departure of Rob Noel, the highly regarded property director. We believe the underperformance is overdone,' JPM said.
The company is due to release results next week when JPM expects Great Portland will probable become the first company since the property slump started to report a positive revaluation of its portfolio.
'We look for 221p net asset value [in next week's results] and we expect further details on its acquisition strategy, while a further deal cannot be ruled out,' the US bank said.
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