Macquarie assesses Dexus has been able to improve cash flow by recycling capital, and earnings have grown despite a challenged environment. Office markets form the base and asset valuations are resilient. The broker expects earnings growth in excess of 6% in both FY23 and FY24.
There is also upside from funds management. The business has $23bn in funds under management making it the fourth largest under the broker’s coverage with unlisted and listed funds in the platform.
While Macquarie does not assume it is all blue sky, generating a track record of growth in this area could mean the multiple expands. Rating is upgraded to Outperform from Neutral and the target is raised to $11.67 from $11.11.
Sector: Real Estate.
Target price is $11.67.Current Price is $10.64. Difference: $1.03 – (brackets indicate current price is over target). If DXS meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges – negative figures indicate an expected loss).
