RBC Capital Markets slightly lowers target price on Impact Healthcare

Analysts at RBC Capital Markets slightly lowered their target price on real estate investment trust Impact Healthcare from 125.0p to 120.0p on Tuesday as it reduced its earnings forecasts following the trust's recent trading update.

RBC Capital stated it had reduced its full-year earnings per share estimates by 9% to reflect an implied EPS of 7.06p, saying it believes much of the difference has been driven by lower than expected rental income, partly as a result of a slower pace of acquisitions.

The Canadian bank kept its full-year 2023 dividend forecasts as they were but made "limited changes" to future DPS forecasts, driven by rent/indexation. Dividend cover was forecast to fall from 128% to 111% but remain" consistently over 100%" for all forecast years.

RBC added that news of overdue rent was a first for Impact, but said it appears unlikely to indicate "a significant negative impact" on EPS to come.

"Our underlying EPS forecasts differ from management's adjusted EPS. We include the amortisation of loan arrangement fees in our underlying EPS. We forecast 7.08p and 7.48p of adjusted EPS as defined by management for 2022 and 2023 respectively," said RBC, which reiterated its 'outperform' rating on the stock.

Reporting by Iain Gilbert at Sharecast.com