SEGRO Price Target (SGRO) Slashed Below 52 Wk Low As Shares Downgraded

SEGRO's share price (LON:SGRO) has been the subject of a significant downgrade at Barclays, with the previous target cut by 21%. The analyst action reflects concerns regarding the company's growth prospects and cash flow yields relative to its peers.

With the revised target more than 10% below the current price action, and below the 52 week low of 586.85p, SEGRO shares are trading down 1.03% through the morning London session.

The downgrade to ‘Underweight' from ‘Equal Weight' by Barclays included a price target reduction from 700p to 550p. This revision stems from observations of weaker cash flow yields, with SEGRO's forecasted yield for fiscal year 2025 at 5.6%, projected to rise to 6.3% by 2029.

These figures fall short of the average for overweight-rated peers, estimated at 6.1% in 2025 and 7.7% by 2029. The markets reacted negatively to this assessment, driving the stock down.

Recent half-year results indicated a reduction in annual capital expenditure, attributed to a slowdown in warehouse space take-up and delays in tenant decision-making. This deceleration in growth, coupled with limited acquisition activity despite a £900 million equity raise in February 2024, contributed to Barclays' diminished outlook. While SEGRO raised capital for aggressive acquisitions, competitors such as Warehouses de Pauw have demonstrated greater activity in shifting from development to acquisitions.

Comparative analysis reveals that SEGRO's total accounting return is forecasted at 6.47% over the 2025-2029 period, trailing behind competitors like CTP, WDP, and Tritax Big Box.

Moreover, the company's net loan-to-value ratio is projected to increase from 28.4% in 2024 to 33.5% by 2027, while the implied capitalization rate remains relatively flat at approximately 6.8% over the same timeframe. These metrics raise questions about SEGRO's competitive positioning and financial strategy.

The current market environment presents challenges for SEGRO, requiring strategic adjustments to address slower take-up and tenant hesitations.