Deutsche Bank Raises Savills Stock Price Target Citing Expected Real Estate Recovery
Deutsche Bank has upgraded its price target for Savills Plc (LON: SVS) from GBP 13.19 to GBP 13.43 and reaffirmed a Buy rating on the stock, signaling confidence in the company's future as the real estate market shows early signs of recovery. Despite a tough macroeconomic backdrop that saw global commercial real estate transactions shrink by half between fiscal years 2021 and 2024, Savills demonstrated resilience by growing its revenue by 12%.
This revenue growth was driven by strategic market share gains, expansion into new business lines, and increased focus on Property Management and Consultancy services. However, profitability took a hit, with Savills’ margins slipping by 42% and profit before tax falling 35% due to lower transaction volumes and shifts in the business mix. Transaction-related profits were particularly affected by these market conditions.
Deutsche Bank highlighted that while there was a brief recovery phase in the fourth quarter of 2024, geopolitical tensions and tariff uncertainties stalled progress in early 2025, affecting Savills’ key markets across Central and Eastern Europe, the Middle East, and Asia-Pacific. However, this slowdown is seen as temporary, with the bank pointing out Savills' record pipeline of future work as a strong foundation for a material profit increase once the real estate market rebounds.
Currently, Savills' stock price is approximately 35% below its previous highs and down about 20% over the past year, presenting a compelling value opportunity. The diverse geographic footprint and broad service offerings ranging from transaction advisory to investment management position Savills well for the expected market upswing.
The strategic emphasis on high-margin sectors such as consultancy and property management is further expected to enhance earnings stability and support future growth.
In summary, Deutsche Bank’s revision of the price target reflects a bullish view on Savills’ poised rebound amid improving real estate market conditions, making it a stock to watch for investors seeking exposure to the real estate services sector during a recovery phase.