TSX:ERE.UN - Post by User
Post by
retiredcfon Feb 22, 2022 7:28am
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Post# 34449304
Two Upgrades
Two Upgrades After a “catalyst-rich” fourth quarter of 2021, National Bank Financial’s Matt Kornack raised his target for European Residential Real Estate Investment Trust to $5.60 from $5 with an “outperform” rating, while Desjardins Securiites’ Kyle Stanley increased his target to $6 from $5.50 with a “buy” rating. The average is $5.50.
“We were hard-pressed to see what catalyst could get this stock moving in light of relative trading vs. operational performance during the pandemic. ERES was the most resilient name in our apartment coverage universe but never attracted investor interest. Q4 provided catalysts in spades to change this dynamic and overall trajectory,” Mr. Kornack said. “Management delivered rent growth at the top of their 3-4-per-cent range, despite rent control and pandemic-related impediments, improved occupancy and grew distributions by 9 per cent (while maintaining a conservative payout ratio). Further, rent controls eased in 2022 and the abolition of landlord levies is a potential medium-term margin improvement story. ERES has a structural advantage over Canadian peers owing to its net lease attributes (tenants cover utilities) and modest common areas limiting its exposure to cost inflation. Needless to say, Q4 has reinvigorated our outlook on the name.”