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On Thursday, BofA Securities began coverage of Corporacion American Airports SA (NYSE:CAAP), issuing a Buy rating and setting a price objective of $24.70. The firm’s analyst cited several reasons for the positive outlook on the airport operator, including the potential for growth in underdeveloped travel markets and upcoming expansions. According to InvestingPro data, CAAP currently trades at $21.36 with a P/E ratio of 12.11, suggesting an attractive valuation relative to its growth potential. The company’s overall financial health score of "GREAT" supports the positive outlook.
The analyst noted that CAAP’s exposure to markets poised for recovery, particularly Argentina, is a key factor in the rating. Expectations are set for a positive economic growth cycle under President Javier Milei, which may lead to a favorable renegotiation of CAAP’s Argentine concession’s contractual internal rate of return, potentially increasing it from an estimated 13% to 16.5%. This optimism is reflected in the company’s strong performance, with revenue growth of 31.66% over the last twelve months and a robust return on equity of 27%.
Additionally, CAAP’s growth prospects are bolstered by a robust organic growth pipeline. Notable expansions in Tuscany and Armenia are part of the company’s strategic initiatives to enhance its operational footprint and drive revenue. InvestingPro analysis reveals the company is currently undervalued, with additional growth drivers and financial metrics available through the comprehensive Pro Research Report, which provides deep-dive analysis of 1,400+ top stocks.
The possibility of securing new airport concessions further underpins the optimistic stance. BofA Securities highlighted Montenegro and Angola as more likely opportunities for CAAP, with Brazil and Nigeria presenting more challenging but potentially rewarding prospects.
The price target of $24.70 is based on a discounted cash flow analysis, a valuation method that estimates the value of an investment based on its expected future cash flows. This target reflects the firm’s confidence in CAAP’s ability to capitalize on the identified growth drivers and to continue expanding its market presence globally.
In other recent news, Corporacion America Airports reported its fourth-quarter 2024 earnings, meeting analyst expectations with an earnings per share (EPS) of $0.21 and revenue of $461.1 million. Despite the revenue surpassing forecasts, the company experienced a 4.41% drop in its stock price due to concerns over a 7% decline in EBITDA and a 1.2% decrease in passenger traffic. The company served nearly 80 million passengers in 2024, with a noted increase in cargo volumes by 16% year-over-year. Citi analysts have raised the price target for Corporacion America Airports to $23.00 from $21.00, maintaining a Buy rating and projecting improved EPS figures for the coming years. Citi’s analysis anticipates better traffic volume growth and slight improvements in the working capital cycle. Additionally, Corporacion America Airports is cautiously optimistic about Argentina’s domestic traffic recovery in 2025 and is exploring global mergers and acquisitions. The company plans to enhance route connectivity and expand commercial operations as part of its strategic initiatives.
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