On Thursday, Wharf Real Estate Investment Company Limited (1997:HK) (OTC: WRFRF) experienced a shift in stock rating as Jefferies adjusted its stance on the company's shares.
The investment firm downgraded Wharf REIC from "Buy" to "Hold" and concurrently reduced the price target from HK$30.00 to HK$24.00.
The revision in rating and price target comes as Jefferies anticipates a subdued performance for the company, citing concerns over its rental revenue and dividend payouts.
Specifically, the firm's projections fall short of consensus estimates, with rental income expected to be 3% lower and dividend per share (DPS) 8% below the market's expectations.
The forecasted FY24 DPS of HK$1.32 suggests a modest year-over-year growth of 3%, primarily driven by interest savings and the expiration of rental relief measures.
Despite the downgrade, Jefferies acknowledges that Wharf REIC's high recurring earnings yield, which is around 8%, may lend some support to the share price.
However, the firm points out that the current retail sales trends, especially in discretionary and luxury segments, show a visible decline, leaving little room for near-term earnings catalysts.
The updated price target of HK$24.00 reflects Jefferies' revised outlook on Wharf REIC's financial prospects. The company's stock will continue to be monitored by investors as they assess the impact of market conditions on its performance.
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