Barclays analyst Paul May has a strong track record of covering property companies in the UK and Europe – and two of his picks could be good picks for your portfolio.
Apart from providing investment recommendations, it also develops financial models to forecast financial figures of companies.
Today we picked two Real Estate Investment Trusts (REITs), Land Securities Group (GB:LAND) and Segro (GB:SGRO) of its recommendations, which have good upside potential.
We used the TipRanks Expert Center which lists various analysts and their recommended picks that can guide investors in making informed decisions.
May is a director and co-head of the property equity research team at Barclays. Prior to joining Barclays in 2018, he worked with Thames River Capital, covering UK listed property companies.
According to the TipRanks star rating system, May is a four-star rated analyst with a 55% pass rate. It is ranked 1,239 out of 7,963 analysts and 2,405 out of 22,261 total experts.
It has an average return of 5.7% per trade. But its highest rating to date was Hammerson plc REIT (GB:HMSO) which generated a return of nearly 100%.
Let’s see the two stocks in detail.
Land Titles Group
Land Securities Group is a leading real estate development group focused on commercial spaces. It is also a real estate investment trust (REIT).
The main strength of the company is its attractive dividend policy with a yield of 7.2%. Since REITs distribute the majority of their profits to their shareholders, Land Securities Group is no different.
In its annual results for 2022, the company announced a final dividend of 13p, bringing the total dividend to 37p. This is 37% more than last year’s dividends.
The company has a diverse portfolio of properties spread across central London, urban districts and major retail destinations. This diversity helps the company navigate through the current economic challenges facing the real estate industry.
The stock price is down 35% this year, making it more sensible to make an entry.
Is Land Securities a good buy?
According to TipRanks analyst consensus, Land Securities stock has a Hold rating.
The average target price is 679.2p, with a forecast high of 850p and a forecast low of 500p. The price target implies an upside potential of 35%.
May has a target price of 780p, on the stock which is showing a 53% increase from the current level.
Segro Plc
Segro is a REIT and also a property developer, managing industrial space and warehouses in the UK and mainland Europe.
The company’s half-year results for 2022 show continued demand translating into strong business growth.
Segro’s pre-tax profit rose 29% to £216m, helped by rising rents due to supply and demand imbalances. The company generated £55m of new headline rent commitments in the first half, showing strong user demand.
Looking ahead, the company has a development pipeline of projects at the advanced stage of pre-letting discussions which could lead to £118m in rent.
Looking at dividends, Segro increased its interim dividend by 9% to 8.1 pence per share, or a third of its total dividend.
Segro stock price prediction
According to the consensus of analysts from TipRanks, Segro stock has a strong buy rating.
The SGRO price target is 1,189.7p, which is 67% higher than the current price level. The price target has a high prediction of 1,400p and a low prediction of 985p.
Conclusion
Both companies recommended by May have strong market positions that will help them weather short-term headwinds.
May has a buy rating on both stocks.
Disclosure