Berenberg lowers target price on Primary Health Properties

Analysts at Berenberg lowered their target price on real estate group Primary Health Properties from 165.0p to 125.0p on Tuesday as it said it continues to see "better opportunities" elsewhere.

Berenberg stated Primary Health Properties' full-year results reflected "another resilient year", demonstrating the benefits of its "high-quality tenant counterparties and assets", which remain "critical" to national infrastructure.

Despite this resilience and its recent acquisition of Axis, Berenberg expects near-term expansionary activity to remain limited by current market conditions and above-average leverage.

The German bank also expects PHP to be affected by "some additional negative valuation impacts" in 2023 and for debt refinancing to pressure earnings growth from 2025.

"As such, although the shares should continue to provide solid income for risk-averse investors, we continue to think that there are better opportunities, for growth or income, elsewhere in the sector," said Berenberg, which stood by its 'hold' rating on the stock.

"PHP trades at a CY 2023E P/NTA of 1.01x, a 33% premium to our coverage universe on 0.76x and a 16% premium to close peer Assura. The shares trade at a 2.3% premium to our trough NTA forecast and yield 6.1%."

Reporting by Iain Gilbert at Sharecast.com