Castellum Shares Upgraded to Buy as UBS Sees Value Unlocking Potential

Castellum AB shares (STO:CAST) edged higher following an upgrade from UBS this morning, which lifted the Swedish real estate company to Buy from Neutral and raised its price target to 135 SEK from 120 SEK. The stock currently trades at 107.70 SEK, suggesting potential upside of approximately 25% to the new target, as markets digest the bank's optimistic view on the company's strategic repositioning under CEO Pål Ahlsén.

The upgrade comes at a critical juncture for Castellum, whose shares have declined 9% over the past year amid a challenging environment for Swedish commercial property. UBS believes the company's refreshed strategy will unlock significant net asset value and drive return on equity upside through 2026 and beyond. The firm highlighted Castellum's target of achieving a 10% ROE through the cycle, with UBS projecting an 8.7% ROE by fiscal year 2030 and potential to reach the 10% threshold by FY29 or FY30.

Central to UBS's thesis is the view that markets are undervaluing Castellum's NAV growth prospects. The stock currently trades at a 32% discount to net asset value, a significantly wider gap than the 14% discount UBS forecasts based on its analysis. This valuation disconnect, combined with the company's strong balance sheet and Sweden's resilient economic backdrop, forms the foundation of the bank's more constructive stance.

Castellum has been actively reshaping its portfolio to align with its profitability targets. In December 2025, the company announced the sale of seven non-core properties across Sweden and Denmark for 500 million SEK. These assets, totaling 32,800 square meters with a 76% occupancy rate, were deemed insufficient to meet the 10% ROE objective. The divestment reflects management's disciplined approach to capital allocation, redirecting resources away from lower-yield properties toward higher-return opportunities.

The UBS upgrade marks a notable shift in analyst sentiment, though the journey has been gradual. Goldman Sachs moved Castellum to Neutral from Sell in September 2025, albeit with a reduced price target of 98 SEK. Goldman acknowledged headwinds in the Swedish office market, including negative net lettings year-to-date, but pointed to improving macroeconomic conditions. The firm projected Sweden's real GDP growth would accelerate from 0.8% in 2024 to 1.8% in 2026, providing a more supportive environment for office markets where Castellum maintains significant exposure.

As of mid-January 2026, analyst consensus sits at Moderate Buy, based on one Buy and two Hold ratings. The average 12-month price target of 126 SEK implies upside of nearly 20% from current levels, positioning Castellum as a potential recovery play within the Nordic real estate sector.

Markets appear to be weighing the company's strategic progress against persistent operational challenges. While the Swedish office market remains sluggish and vacancy rates elevated in certain segments, Castellum's proactive portfolio optimization and management's clear ROE targets provide a roadmap for value creation. The company's financial flexibility, bolstered by its strong balance sheet, positions it to capitalize on opportunities as economic conditions improve.

The UBS upgrade may serve as a catalyst for renewed interest in Castellum shares, particularly among value-oriented investors seeking exposure to Swedish commercial property at a meaningful discount to NAV. Whether the stock can sustain momentum toward the 135 SEK target will likely depend on execution of the portfolio strategy, continued balance sheet discipline, and the pace of recovery in Sweden's office market fundamentals.