Stifel Downgrades Unite Group on Occupancy Concerns

Stifel Lowers Unite Group Rating to Hold

Stifel has downgraded Unite Group plc from Buy to Hold and slashed its price target to 600p from 975p. The decision is driven by significant concerns regarding student accommodation occupancy rates for the upcoming academic year.

Market Overview

The Purpose Built Student Accommodation sector is facing headwinds. A decline in university applications from international students, following UK visa rule changes, has impacted demand. Additionally, affordability challenges for domestic students and a cultural shift toward attending local universities are contributing to slower sales rates.

Economic and Market Impact

Unite Group's share price has fallen approximately 30% over the last year, while the EPRA UK Index grew 10%. In response to the uncertain outlook, the company has increased its annual disposal target to £350 million and initiated a £100 million share buyback program.

Outlook Summary

Stifel analysts anticipate limited dividend growth for Unite Group. Their new 600p target price is based on the assumption that the shares will trade at a 6.5% dividend yield, aligning with other income-focused stocks under their coverage.

FAQ

Q: Why did Stifel downgrade Unite Group?
A: The downgrade was due to concerns about lower student occupancy rates, influenced by fewer international students after visa changes and domestic affordability issues.

Q: What is Unite Group's new price target from Stifel?
A: The new price target is 600p, a significant reduction from the previous 975p.

Source: Investing.com