Jarden upgrades Dexus, sees 'limited downside risk'
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The news: Jarden has upgraded its price target on Dexus with analysts seeing "limited downside risk from here" for the property investor.
The numbers: Jarden retained its 'neutral' rating on Dexus but hiked its price target by 12% from $7 to $7.85. Dexus shares last closed at $7.58.
Analysts also updated their funds from operations (FFO) forecasts by 2.9% in FY25, 2.6% in FY26 and -7.3% in FY27.
The context: Jarden's analysts said that their updated analysis suggests that "much of the tough office and fund management environment is reflected in valuations", with Dexus now holding limited downside risk.
However, they noted that in the absence of significant FFO and adjusted FFO growth over the next few years, it is hard to see a catalyst for ongoing outperformance in a sector where the outlook is gradually improving.
Jarden also flagged that Dexus is one of the cheaper large-cap REITs on the ASX. Despite its 380 basis point outperformance versus the AREIT sector in the last three months, Dexus has "significantly" underperformed the sector over the last few years, leaving it the cheapest among its peers.
Last month, Dexus widened its full-year loss on the back of a slump in property valuations.
What they said: "We remain neutral rated for now but see improving office or fund management fundamentals as a catalyst to turn more positive," Jarden's analysts said.
The source: Jarden research
