Berenberg raises target price on Segro

(Sharecast News) - Berenberg lifted its price target on Segro from 915p to 995p, saying this represented fair value at a 10% premium to adjusted net asset value, after modelling a substantial future valuecreation runway across the group's development pipeline.

Berenberg said Segro's recent capital markets day underlined strong momentum in its European industrial and logistics markets and set out how the company plans to capitalise on a 3.0 GVA powerbank opportunity through fullyfitted datacentre delivery.

The German bank contrasted Segro's strategy with Prologis' rejected third proposal, noting Segro's more levered approach left the shares more exposed to macro swings, even as its urban and European asset exposure, development track record and larger datacentre opportunity offered clear strategic advantages. It said Segro was not capitalconstrained but shareholders would need to accept structurally higher beta and greater shareprice volatility than under Prologis' balancesheetled model.

Using projectspecific discount rates of 8-15%, Berenberg calculated an assetlevel valuation of 1,204p, including 83p for power capacity not valued at the CMD, but said market cyclicality and longterm terminal growth assumptions meant fair value sat lower at 995p. Adjusted EPS forecasts were raised by up to 9% through 2030, incorporating the UK Big Box joint venture and planned datacentre leasing.

Berenberg, which has a 'buy' rating on the stock, added that Segro has historically traded at a premium when forward rental growth exceeds 8.5% and leverage remains investmentgrade, and noted shareholders face a 22 July put up or shut up deadline, with the option to accept any firm offer, support Segro's defence for a higher bid, or wait for a potential white knight.

Reporting by Iain Gilbert at Sharecast.com