Citi raises target price on Segro

Citi stated the logistics sector has, on its estimates of sector growth and tenant affordability, a long-term opportunity from like-for-like growth as market rents drive higher.

The bank also stated that Segro would likely benefit from development pipeline deliveries as it works through its land bank.

There are likely upside risks including higher LFL growth than expected, faster and more profitable execution of development pipeline than expected, and the potential re-imagining of existing standing assets the logistics market is likely to evolve with more densification and alternative/dual-use potential," said Citi.

However, Citi highlighted that on its base case estimates, the 'buy' rated Segro trades on a roughly 39x full-year 2021 price-to-earnings ratio.