Morgan Stanley slashes Lendlease price target on offshore exit
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The news: Morgan Stanley analysts slashed their price target on Lendlease, after the real estate group's recent decision to offload billions of dollars worth of assets from its international operations.
The numbers: The analysts retained their 'equal weight' rating on the stock, but cut their price target from $7.35 to $6.35. Lendlease shares were 0.19% lower at $5.36 by 1:15pm AEST.
The analysts also lowered their earnings per share forecasts by 11% in FY25, 50% in FY26 and 21% in FY26.
The context: Morgan Stanley has built a new model for Lendlease to reflect the company's exit from offshore operations and revised focus solely on Australia in its development and construction segments.
They noted that Lendlease was "hamstrung" by uncertainties surrounding the size of its Australian project pipeline, asset valuation across its remaining core business, and its future development margins.
Earlier this month, Morningstar removed Lendlease from its monthly Australia and New Zealand 'Best Stock Ideas' list, on expectations that the sell-off of most of its international business will likely see the loss of value in its long-term development and construction projects.
The source: Morgan Stanley research
