Citi analyst Aaron Guy upgraded the rating on Derwent London plc REIT (DLN – Research Report) to a Buy today, setting a price target of £27.67.
Aaron Guy has given his Buy rating due to a combination of factors that suggest a positive outlook for Derwent London plc REIT. The rental market is expected to improve, providing more opportunities for development, which could lead to a growth cycle for the company. Despite current market volatility, the stock is priced at levels similar to historical distressed valuations, but without the actual market distress, indicating potential for significant value appreciation.
Aaron Guy also highlights the strong tenant demand in the West End prime submarket, where supply is limited, suggesting potential for rental growth. The company’s valuation appears attractive, with stock trading at levels comparable to past periods of significant rally. Although there are expected declines in EPS estimates for 2025-26 due to asset removals for development and higher borrowing costs, earnings are anticipated to grow again from 2027. The stock’s current valuation, combined with a favorable price target increase, supports the Buy recommendation.
According to TipRanks, Guy is an analyst with an average return of -3.4% and a 48.00% success rate.