Investing.com -- Shares of ASR Nederland (AS:ASRNL) rose on Monday following an upgrade from UBS, which revised its rating of the stock to "buy" from "neutral."
The brokerage cited several compelling factors, including strong shareholder returns, attractive valuations, and increased potential for further share buybacks.
UBS analysts flagged that ASR’s recent capital actions signal confidence in its financial health and future growth.
Earlier this month, ASR announced a surprise €100 million share buyback program, equivalent to 1% of its market capitalization.
UBS noted that this move reflects ASR's ability to prioritize shareholder returns while maintaining robust solvency ratios.
UBS projects additional annual buybacks of €25 million through 2027, which, along with dividends, could result in a 10% total capital return yield by 2026.
This estimate aligns ASR's yield with sector averages but underscores its potential for long-term gains.
The analysts pointed out ASR's strong solvency position, expecting it to remain above 200% from 2025 onwards, with €1.3 billion in excess capital by 2027.
UBS indicated that this financial flexibility could enable ASR to enhance shareholder payouts further or invest selectively in growth opportunities.
Valuation metrics also favor ASR. The company's current price-to-operating capital generation (P/OCG) multiple of 6.8x is substantially below its historical average of 9.5x.
UBS suggests this disparity implies a potential 40% upside in ASR’s stock price. Moreover, ASR’s 2026 estimated shareholder return yield of 10.3% outpaces its historical average of 7.3%, boosting its attractiveness relative to peers like NN Group (AS:NN).
While ASR faces potential risks from a pending Dutch Supreme Court case related to rental policies, UBS views the downside as limited and notes potential solvency benefits if the ruling is favorable. With a revised price target of €51.50 per share, UBS estimates a 16% upside from current levels.