On Tuesday, Jefferies updated its stance on Big Yellow (OTC:YELLQ) Group Plc. (BYG:LN) (OTC: BYLOF), increasing the price target to GBP13.59, up from the previous GBP12.49, while reiterating a Buy rating on the stock.
The firm's decision reflects confidence in the company's ability to initiate its next development phase, leveraging its planning expertise and strong brand value. The analyst at Jefferies highlighted Big Yellow Group's potential for growth, noting the company's conservative approach to financing.
The analyst's remarks included praise for Big Yellow Group's strategic capabilities, particularly in planning and brand strength, which are seen as pivotal for the company's upcoming development phase. The firm's financial strategy, described as conservative, is anticipated to support the company's growth without taking on excessive risk. The rental guidance provided by Big Yellow Group is set at 'mid single digits,' starting from a relatively low average capital value of £400 per square foot.
The revised price target of 1359 pence (GBP13.59) represents a 9% increase from the previous target and is derived from a Discounted Cash Flow (DCF) analysis.
This valuation method considers the present value of expected future cash flows, adjusted for risk, and is a common technique used in equity valuation. The maintenance of a Buy rating indicates that Jefferies continues to view Big Yellow Group's shares as a favorable investment opportunity.
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