Although investors hardly expressed their excitement following shopping centre giant Westfield Group's (ASX: WDC) annual results last week, a number of analysts seem to have taken a different perspective and have rated the stock a 'buy'.
In its full-year results statement, the company said: "Our Australian business and platform has proved highly resilient, due to the high quality of the portfolio with excellent sales productivity, almost full occupancy and continued growth in average rents and net property income." It added that there was an improvement in retail sales growth with comparable specialty sales up 3% in the December quarter and another 4% in January (its best period in four years).
CLSA believes that the local division's recent strong performance improves the likelihood that the Scentre merger proposal will gain approval from Westfield Retail Trust (ASX: WRT) investors who have widely expressed their opposition to the deal based on the costs involved. Under the proposal, the Group's Australian and New Zealand assets would be combined to form Scentre Group while the Group's international assets would be spun off into Westfield Corporation.
CLSA told clients that Westfield Group was in the clutches of a rebound year and gave the stock a 12-month price target of $12 which resembles a 17% upside from today's price of $10.27. Meanwhile, Moelis also maintained its buy recommendation with a target price of $12.66.
After a shocking run in 2013, which saw the stock heavily underperform the S&P/ASX 200 Index's (Index: ^AXJO) (ASX: XJO) 15% return, analysts are certainly bullish on the stock.
So is it a buy?
Personally, I love the company's prospects. Although there is volatility facing the brick-and-mortar retail sector, I believe the Group is making the right decision to sell its non-core assets and use the proceeds to redevelop its major stores.
The company's overseas prospects are looking fantastic. The redevelopments of Westfield London and Croydon (in London's south) as well as the Ground Zero mall in New York should prove to be fantastic assets for the company in the long-term. Meanwhile, there is a very real chance that the company could also look to re-enter the Brazilian market which would prove beneficial.
Based on the strength of the corporation and its future opportunities, I believe the shares are looking very attractive for long-term focused investors.
