[ad_1]
Goldman Sachs thinks commercial real estate giant Cushman & Wakefield will have a tough time navigating the current macro environment. The bank downgraded the stock to neutral from buy on Monday. It also cut its price target on Cushman to $11 per share from $15.50 per share, implying upside of about 12% from Thursday’s close. Goldman noted that the company is highly leveraged, which is adding to concerns over its outlook on the stock, while the company also maintains an uneven free cash-flow conversion. Goldman added that Cushman’s interest expenses have also risen considerably as benchmark rates continue to climb. “As brokerage business topline slows down significantly, and interest expenses remain elevated, we expect EBITDA to deteriorate,” Goldman’s Chandni Luthra said. “As a result, we expect CWK’s leverage ratio to track slightly higher in 2023.” CWK YTD mountain Shares of Cushman and Wakefield have been under immense pressure so far this year, and Goldman Sachs doesn’t expect a company recovery this year. Shares of Cushman are down nearly 21% in 2023, as the broader commercial real estate sector faces turmoil. Goldman is pessimistic toward a total recover in the sector this year, and its previous bullish sentiment toward Cushman was in part based on the company’s expectation that lending rates would remain stable. Meanwhile, a tightening of liquidity will continue to pose a challenge to real estate investors, Goldman estimates, which will “more than offsets any tailwinds from potentially lower rates.” “As such, we are cautious on CRE transaction and the lending market in 2023, and expect the recovery anticipated by the company previously in late 2023 is likely to be postponed into 2024, and that too much less pronounced as before,” Chandni said. — CNBC’s Michael Bloom contributed to this report.
[ad_2]
Source link
