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On Tuesday, Aeroports de Paris (ADP:FP) (OTC: ARRPY) stock received an upgraded rating from BofA Securities, moving from Neutral to Buy. The firm also increased its price target for the company's shares to €155.00, up from the previous target of €128.00. This revision reflects an anticipated total return upside potential of approximately 50%.
The upgrade comes after Aeroports de Paris experienced a significant underperformance compared to its airport peers such as AENA and FHZN year-to-date, with a gap ranging from 26-31%. This underperformance was attributed to the political and tax challenges faced within the French market.
Despite these headwinds, BofA Securities views Aeroports de Paris as a structurally attractive investment, noting its leadership position in the airport sector in France, India, and Türkiye, which are among the most visited countries globally.
Several catalysts have been identified that could potentially enhance the company's performance. These include the anticipated approval for a tariff hike set for 2025, an acceleration in traffic in the first quarter, and a possible increase to the fiscal year 2025 retail targets. BofA Securities also sees a 3% potential upside to the consensus estimate for the company's 2025 EBITDA.
The valuation of Aeroports de Paris also plays a role in the upgrade, as the stock is currently trading at 7.4 times its estimated 2025 EBITDA, which is lower compared to the 9.5 times EBITDA valuation of its European peers. In light of these factors, BofA Securities has revised its earnings per share (EPS) estimates for Aeroports de Paris, raising them to €3.51 from €3.13 for 2024, to €6.85 from €5.89 for 2025, and to €6.92 from €5.64 for 2026.
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