Berenberg upgrades Empiric Student Property to 'buy'
Analysts at Berenberg upgraded real estate investment trust Empiric Student Property from 'hold' to 'buy' on Thursday, stating the group was "geared into the operational recovery".
Berenberg said as the purpose-built student accommodation sector recovers from the Covid-19 pandemic, Empiric remains "the most highly geared way" to play the operational recovery.
"The clouded history of Empiric as a listed company has highlighted failings in both portfolio composition and operational structure, which are only now beginning to be resolved. As the market normalises following the pandemic, Empiric with higher operational gearing and a higher weighting toward international students remains well-placed to outperform," said Berenberg.
The German bank stated that said gearing, both operational and financial, was the primary reason why the company had been "hit the hardest" over the past 12 months. However, with strong demand tailwinds and management's commitment to portfolio improvement, Berenberg said the balance of risk/reward had now shifted.
"For those willing to accept this gearing and some execution risk, we forecast significant upside for the stock," said Berenberg, which also raised its target price on the stock from 70.0p to 100.0p.