Vonovia’s Hold Rating: Balancing Modest EBITDA Growth with Short-Term Challenges

Stifel Nicolaus analyst Denese Newton has maintained their neutral stance on 0QFT stock, giving a Hold rating today.

Denese Newton has given his Hold rating due to a combination of factors influencing Vonovia’s current financial standing and market performance. The company’s FY24 results aligned with previous guidance, showing a modest increase in EBITDA driven by rental growth. However, the earnings before tax per share saw a decline due to higher financing costs and increased payouts to minorities, which affected overall profitability.
Despite stabilizing capital values and a projected organic rental growth of 4% for FY25, the company faces challenges in the form of a higher interest rate environment that could hinder growth at the EBT level. Additionally, Vonovia’s shares have underperformed the sector following the announcement of substantial infrastructure investments, which, coupled with the rise in the 10-year bund yield, has pressured the share price. While the company maintains a long-term growth target for EBITDA, these short-term challenges contribute to the Hold rating, reflecting a cautious outlook on the stock’s potential for significant near-term appreciation.

In another report released today, Jefferies also maintained a Hold rating on the stock with a €29.00 price target.