Hammerson Plc was a stock obliterated by the pandemic, with more than 86% of its valuation taken from its share price between January and October 2020. However, it had been on the decline for a couple of years prior. While it has found some sort of stability since late 2022, analysts are split in their view of where Hammerson shares (LON: HMSO) are headed.
Investors are now considering whether to buy or sell Hammerson stocks. Here we will examine the prospects for both short, and long-term investors and provide data to ascertain where Hammerson shares are forecast to be headed this year and beyond.
Where Will Hammerson’s Stock Price Be In 12 Months?
Hammerson is a well-run firm with a decent track record. However, various headwinds have impacted its share price, so there are many variables to consider.
The first is the role of dividend yield. Part of Hammerson’s historical attraction has been its ability to generate a consistent return for investors. It wasn’t ever going to match the potential growth prospects of a tech start-up, but it was a well-run business generating the kinds of steady returns much sought after by those running high-yield investment strategies. However, that yield has declined. The company’s board did not recommend a final dividend for the 2022 financial year, but it did for 2023.
Even so, any signs that the firm can begin to turn a profit could potentially attract an influx of pension fund cash, which would help push the shares higher.
An increase in footfall will drive the company’s ability to increase profits. The decline of in-store shopping and workers heading to offices, especially since the pandemic, will have had a significant impact on the Hammerson business. The company is aiming to adapt to the changing environment. It said it had a strong 2023, with its destinations “in high demand by occupiers and visitors.”
At the moment, Hammerson’s focus is on reducing costs and unlocking value from the portfolio’s development opportunities. Its ability to adapt to changes and unlock potential value from its real estate ventures will be key moving forward.
Overall, analysts are split in their view of the stock, according to data from TradingView. Seven see it as a Buy, two assign it a Neutral rating, and five see it as a Sell. The average 12-month price target of 27.5p represents a potential decline from current levels (June 3).
Hammerson News
In February 2024, Hammerson reported its full-year 2023 results, revealing gross rental income fell to £208 million from £215 million. However, its adjusted earnings rose to £116 million from £105 million and it remains confident, stating:
“Our city centre destinations are in high demand. This year we delivered a positive performance across our key strategic, operational and financial metrics. Like-for-like gross rental income was up 6%, following another record year of leasing. Occupancy remains strong and footfall and sales were up again.”
They added: “Whilst our eyes are open to the current macro-economic environment, our occupiers are thriving and our visitor numbers are on the rise in our realigned portfolio.”
In May 2024, Hammerson revealed it had completed the sale of its portfolio of seven retail parks to Canadian investment firm Brookfield for £330 million in cash. The deal concluded Hammerson’s exit from the UK retail parks sector.
Who is Hammerson?
Hammerson’s core business is developing and investing in commercial property. The firm has 20 flagship sites spread across 17 cities. They range from mixed-use ‘urban quarters’ such as Bishopsgate Goods Yard in Shoreditch, London, to La Vallée Village outlet shopping destination located adjacent to Disneyland Paris.
The firm is listed on the London Stock Exchange under ticker HMSO and, since 2017, has been incorporated as a REIT (Real Estate Investment Trust).
The collection of city-centre offices, shopping malls, and leisure facilities the firm owns are occupied by super-stressed tenants, especially as footfall and people working from the company office decline. For some, Hammerson is a long-term play, and buying in at current levels is seen as a great buying opportunity.
Fundamental analysis can help answer the question, is Hammerson a good stock to buy? But with short-term price volatility at current levels, it is technical analysis that can help exploit short-term pricing anomalies.
Hammerson Long-Term Forecast
How do you make a long-term Hammerson stock forecast? With great difficulty. The sector the firm operates in was one of the most significantly affected by COVID and lockdowns, and while the enforced changes on everyday practices are no longer around, the shift in behaviour is evident, especially with the working-from-home trend.
With more people working from home and shopping online, large parts of Hammerson’s property portfolio have been impacted, but the company is aiming to adjust to the new environment.
The firm is exposed to various external risk factors, but it is open-minded about how best to return value to its shareholders.
Hammerson has introduced changes to personnel and its business model in an effort to bring about change. There has yet to be enough time to assess if Hammerson has been able to adapt adequately, but some analysts in the last few months have become slightly more constructive on the stock, suggesting its painful transition is going well. Due to the uncertainty, investors should assess how the current macroeconomic environment, Hammerson headwinds, and recent performance will impact its long-term future. In our opinion, it is best to stay neutral for now.
Is Hammerson a Good Buy?
The short-term and long-term prospects for Hammerson are relatively hard to call. The situation the firm finds itself in means it’s trading at low levels, but it does have a previously long-term track record of being a darling of institutional investors who prized its stability and income yield. There are many who consider it to be an ideal time to buy Hammerson shares now.
It could well be possible that entry points appear at levels lower than the current price, but glass-half-full investors with a long-term plan can argue this is the mother of all dips.
