Stockland shares rise as Morgan Stanley hikes price target
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The news: Stockland shares climbed on the ASX after Morgan Stanley increased its price target on the stock, saying the property developer is "just scratching the surface" of unlocked earnings from its acquisition of 12 Lendlease communities projects in November.
The numbers: Stockland shares were up 1.97% to $4.92 by 2:18pm AEDT and over the 12 months has risen 9.47%.
Morgan Stanley retained its 'overweight' rating on the stock and lifted its price target from $6.35 to $6.50.
The context: Morgan Stanley analysts believe the market has under appreciated what the Lendlease deal could deliver strategically as it transitions into a multifaceted residential developer.
The acquisition means Stockland now holds its largest landbank in its history with the potential to upsize its land lease business, they noted, which could add around 7% to medium-term EBIT.
The analysts believe the additional land could unlock earnings from adjacencies such as the single-family build-to-rent segment, which could become a core strategy.
The source: Morgan Stanley research
