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(Sharecast News) - RBC Capital Markets sees nearly 30% upside at GCP Infrastructure, saying the stock is "cheap and catalyst rich".
The broker has initiated coverage of the FTSE 250 closed-ended investment company with a 'outperform' rating and 90p target price.
The stock has falling by 30% over the past 12 months, but RBC says that an improved outlook "is yet to be fully reflected in the shares".
The shares are trading at a 37% discount to net asset value which "seems excessive", the broker said, with the discount being the highest in the renewable and infrastructure peer group. The broker's target price assumes a discount of 15% to net asset value.
"Higher rates have inevitably weighed on GCP's ~£1bn long-duration, debt-focused portfolio with shares declining ~35% since rate hikes began; but we now view reasons for optimism. Its newly announced ~£150m disposal process will simplify, derisk and delever the portfolio, and reduce exposure to key 'problem assets'. Meanwhile, an improving rate environment will provide a key macro catalyst for rerating" RBC said.
The stock was up 0.1% at 70p by 0854 GMT.
