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Has the tumbling Home REIT share price become a bargain?

on Nov 25, 2022
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  • Home REIT stock price plunged to an all-time low this week.
  • Viceroy Research published an extremely bearish report.
  • The overall trend is barish but a short-term rebound can’t be ruled out.

Home REIT (LON: HOME) share price has been in a freefall in the past few days as investors react to a stinging short-seller report. The stock plunged to a low of 53.5p, which was the lowest level on record. Its lowest level was about 58% below its all-time high.

Viceroy Research report

Home REIT is a company in the real estate industry. It buys and invests in a diversified portfolio of houses for people facing homelessness, housing associations, and other organisations. As such, in many cases, the company provides homes to people who cannot afford them. 

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It therefore works with local organisations that focus on the challenge of homelessness. The biggest tenants are Big Help Project, Lotus Sanctuary, Supportive Homes, and Redemption Project.

The most recent results showed that Home REIT acquired 2,308 properties by September this year. These properties provided over 11,131 beds. Its first-half rental income rose to over 17.51 million pounds leading to a profit of 38.31 million pounds. This profit includes the change in fair value of its properties.

Home REIT share price has been in a freefall as the market reflects on the latest report by Viceroy Research. The report identified numerous challenges that are facing the company. For example, it noted that some of its biggest tenants cannot afford to pay rent. For example, it noted that Big Help Project may soon find itself being unable to pay its rent.

Viceroy also identified challenges with Home REIT’s finances and growing administrative costs. The most recent results showed that the total administrative expenses rose by more than 138 million pounds. It also noted that its receivables were significantly overdue, with many being over 60 days.

Home REIT has denied these claims and called the report inaccurate and misleading. It also noted that Viceroy did not engage its board, investment advisor, and team.

Home REIT share price forecast

Home REIT share price
Home REIT stock chart by TradingView

The daily chart shows that the HOME share price has been in a strong freefall in the past few months. It has managed to move below the important support level at 96.5p, which was the lowest level on October 21st, 2020. The stock dropped below the important support at 80.4p, the YTD low. It has moved below all moving averages while the Relative Strength Index (RSI) has moved close to the oversold level.

Therefore, the overall trend for the stock is bearish, with the next key support being at 50p. However, in the immediate short term, we can’t rule out a situation where the REIT forms a dead cat bounce.