Analysts at Liberum raised their target price on regeneration developer and investor U+I from 100.0p to 140.0p on Tuesday after a 100-day review of its portfolio and strategy saw management present a strategy that will help deliver material returns to shareholders.
Liberum said U+I’s refreshed management team had “drawn a line under the recent poor performance” and was now transforming the business.
“The 100-day review is complete and the action points will create a simpler, leaner business with a better quality portfolio over time. We can see a path to long-term value creation,” said Liberum.
The analysts also stated that positive planning decisions at U+I, a corporate client of the broker, would be “crucial” to realising this.
“In the short term, a focus on turning non-core assets into cash should help close the share price discount to NAV; currently 40% to spot NAV,” said Liberum, which also reiterated its ‘buy’ rating on the stock.
“U+I has a substantial £5.5bn GDV pipeline of core regeneration projects, which have the potential to deliver over £60m in planning gains to U+I and between £127.0m and £253.0m undiscounted development profits longer term, assuming a 10-20% share of the current projected scheme gross margins. The potential gains are well in excess of the current £117.0m market cap. Nearer-term, management is focusing on a ‘prove’ strategy, executing its business model and reaching key milestones.”
