Barclays Downgrades Unite Group#
On Tuesday, Barclays downgraded Unite Group Plc from "overweight" to "equal weight". This change comes after the company issued its third profit warning in just four months, indicating concerns about its operating performance and potential risks to demand.
Profit Warnings and Performance Issues#
The latest profit warning was issued alongside Unite's full-year results in February. Barclays noted that this warning was significant enough to warrant a change in rating, especially since the brokerage had maintained its previous rating despite earlier warnings in October and November 2025.
Unite's leasing trends have shown a decline, with only 68% of its properties leased for the 2026/27 academic year as of February 24. This figure is down 300 basis points, or 3%, compared to the previous year. Additionally, nomination agreements with universities, which are crucial for securing income, fell to 55%, a drop of 4% from earlier reports.
Earnings Outlook and Company Guidance#
Due to these developments, Barclays has lowered its earnings forecast for Unite. The expected recurring earnings per share (EPS) for 2026 is now projected at 41.7 pence, down from 47.5 pence in 2025, marking a decline of 12.2%. The company has also adjusted its guidance, now anticipating an EPS of 41.5p to 43p for FY26, down from a previous range of 42.8p to 44.9p.
Market Trends and Future Implications#
Barclays has revised its occupancy expectations for 2026 to 93.2%, a slight decrease from 93.7%. The brokerage also noted a reduction in long-term rental growth expectations from 2.0% to 1.5%. Furthermore, broader market trends indicate a shift towards alternative living arrangements, which accounted for 74% of student accommodation in the 2024/25 academic year, up from 70.5% in 2020/21. This shift may continue to impact occupancy rates negatively.
As of March 16, Unite's stock closed at 484 pence, suggesting a potential upside of 7.4% to the newly revised price target of 520 pence.