Savills rallies on Citigroup upgrade

Savills got a boost on Wednesday as Citigroup upgraded the stock to ‘buy’ from ‘neutral’ following solid first-half results.

“We were reassured by this resilient performance which served to remind us as to the true portfolio within the group with limited reliance on any one geography or business stream,” Citi said.

The bank said real estate as an asset class is likely to remain attractive, given the ongoing search for yield.

“Savills, as a facilitator of capital flows into this asset class, operating on a global scale, with a significant proportion of non-transactional related revenues (around 55% of group revenues), remains well placed in our view.”

Citi pointed out that Savills shares have de-rated by around 20% year-to-date and now trade at an attractive 2017 price-to-earnings of 10.6x, supported by a 4% dividend yield.

It said that given the share price underperformance, its unchanged target price of 815p now implies total potential return of 18%.

“We retain the view that Savills is an extremely well managed operation with true global reach underpinned by a significant proportion of non-transactional revenues.”

At 0922 BST, Savills shares were up 5.4% to 736.50p.