LONDON (ShareCast) - (Sharecast News) - UBS downgraded Segro on Tuesday to 'neutral' from 'buy' and cut the price target to 985p from 1,045p due to a weaker outlook for logistics rental growth.
"In April we transferred coverage of Segro with a buy rating and an analysis of the potential upside from their data centre pipeline," it said.

"Our view on the data centre upside is unchanged. However, we now revise down estimates for future rental growth in the logistics sector."

UBS said it had expected rental growth achieving the higher end of guidance (3-6% for urban logistics, 2-4% for big box).

"But with ERV growth for 1H24 coming in at only 1.4% (1H23 3.7%), portfolio vacancy rising to the highest level since 2016 and capex spend downgraded by £100m for the second year in a row, we lower our ERV growth forecasts," it said.

Hence the downgrade and price target cut.

Segro shares ended down 2.5% at 873.40p.

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