Shore Capital starts Savills at 'buy'
Analysts at Shore Capital initiated coverage on real estate services group Savills Plc with a 'buy' rating and an 1,180p target price on Monday, citing longer-term opportunities.
Shore Capital views Savills' shares as priced to reflect a cyclical trough, yet believes it enjoys significant opportunities from cyclical recovery and the potential to build earnings per share beyond that from a strategic refresh under its new chief executive.
Savills pointed to "strong" transactional pipelines early in the second half, something Shore Capital said was "seasonally key" for full-year profits.
Shore Capital noted sell-side consensus was looking for full-year pre-tax profits of approximately £147m in 2025 and has forecast similar levels since early this year.
"Instinctively, developments for TA prospects through FY25 have felt less stable to us, so we have pitched a little lower at £138m," said Shore Capital. "But even if we are right on that outcome, the share price looks to have moved ahead of such an event, given we think it largely reflects cyclical trough levels already."
While it started coverage with a fair value of 1,180p, largely based on reversion to igs historical 13.7x price-to-earnings ratio, but said it also sees a path to 1,300-1,400p under cyclical recovery scenarios over time, or towards 2,000p if strategic opportunities can fully crystalise.
Reporting by Iain Gilbert at Sharecast.com
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