London developer Minerva saw its shares soar today on the back of takeover talk.
The company’s shares rose 12% to 157.5p on reports of a bid from Canary Wharf owner Songbird Estates.
The rise, however, coincided with a bearish report on the company from investment bank Citi, which is the company’s broker. Analyst Harry Stokes downgraded his rating on the company from ‘buy’ to ‘hold’ and reduced his share price target to 200p ‘to reflect the high-risk nature of the company’.
‘Minerva is one of the riskiest stocks in the UK real estate sector at the moment, despite the undeniable progress which management has made over the past year,’ said Stokes. ‘There are other companies within the sector which offer similar upside at substantially lower risk and we would look to these first. Therefore, we downgrade our recommendation to hold/ speculative.’
Stokes believes the company should sell its three major developments sites, the Walbrook and St Botolph’s office schemes in the City of London and the Park Place shopping centre in Croydon. ‘Our central thesis is that Minerva needs to aggressively de-risk its portfolio by selling its legacy developments which we believe remain a millstone round its neck,’ said Stokes.