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RBC cuts 'fully valued' 3i Infrastructure to 'sector perform'

14 Jun, 2019 10:21


(Sharecast News) - 3i Infrastructure (3IN) deserves its premium rating but is fully valued, Royal Bank of Canada said as it downgraded the investment company to 'sector perform'.

3IN's portfolio assets have growth potential and the company's strong balance sheet gives it options for further investments, RBC analysts said. Returns are likely to be at the top of 3IN's 8-10% medium-term target and the dividend may also increase faster than expected.

Despite these positives, RBC cut its rating on the shares from 'outperform' after their strong performance left 3IN trading at a near-record 23% premium to ex-dividend net asset value. The broker kept its 295p price target on 3IN shares.

"We believe that the strong premium is justified given the organic growth prospects for the portfolio and market leading returns," RBS said. "However, we await a better entry point for 3IN as we see the stock as fully valued on a 12-month view."

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