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On Tuesday, CFRA analyst Jeff Wong raised the rating of Ferrovial SA (FER:SM) (OTC:FRRVF) from Hold to Buy, accompanied by an increase in the price target from EUR45.00 to EUR54.00. The upgrade reflects a more optimistic view of the company’s future performance, driven by several positive factors identified by the analyst.
Wong’s decision to upgrade Ferrovial’s stock is based on a sum-of-the-parts valuation, which led to a revised 12-month target price. The analyst has also increased earnings per share (EPS) forecasts for the coming years, setting the EPS for 2025 at EUR0.84, up from EUR0.81, and for 2026 at EUR0.98, up from EUR0.85.
The improved estimates for Ferrovial are attributed to sustained operational momentum in the company’s lanes and a continued margin uplift in its construction segment. Additionally, the planned acquisition of a stake in the 407 ETR and the anticipated contribution from the New Terminal One (NTO) at JFK International Airport are expected to bolster the company’s performance.
Ferrovial’s premier North American toll road assets, characterized by dynamic pricing and long-term concessions, are highlighted as a key component of the valuation. These assets are seen as highly defensive and could potentially lead to a re-rating of the company’s stock amid the current market environment.
The analyst also points to positive trends in the construction industry, noting Ferrovial’s record-high orderbook and improving margins as supportive of a bullish outlook. Confidence in the management’s capital allocation strategy is cited as a reason for optimism, with a history of driving growth in shareholder value over the long term.
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