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On Friday, Citi analysts revised the price target for Corporacion American Airports SA (NYSE: CAAP) stock, lowering it from $23.00 to $21.00, while continuing to recommend a Buy rating. The adjustment reflects a mix of factors impacting the global airport operator’s financial outlook. According to InvestingPro data, CAAP currently trades at $17.93, with analyst targets ranging from $19.00 to $24.50, suggesting potential upside. The company maintains a strong financial position with a P/E ratio of 8.67, indicating attractive valuation metrics.
Stephen Trent (NSE:TREN) from Citi outlined several reasons for the price target reduction. Despite better-than-expected traffic results in the fourth quarter of 2024, the forecast for 2025 and 2026 anticipates decreased aeronautical revenue. This expected decline is primarily attributed to challenges in Brazil and currency weaknesses in Argentina.
Additionally, the analyst’s review suggests a lower expected cost of services for CAAP. However, this positive development is offset by an anticipated increase in miscellaneous expenses for the final quarter of 2024. The combination of these factors has led to a lower estimated EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for the company.
Despite the reduction in EBITDA projections, Citi notes that there are mitigating factors in play. The expected decrease in cash taxes and a slight reduction in capital expenditures are seen as positive influences that may partially counterbalance the lowered EBITDA forecast.
Trent’s comments provide a detailed rationale behind the new price target, stating, " Target (NYSE:TGT) price reduced to US$21/share.” He further explains that the revisions in the forecast include the incorporation of various elements into their model, such as the traffic results, revenue expectations, service costs, and miscellaneous expenses.
Investors will be watching Corporacion American Airports SA’s performance closely as the company navigates the challenges and opportunities outlined by Citi’s analysis. The new price target of $21.00 reflects the latest expectations from the financial institution regarding CAAP’s market position and future earnings potential.
In other recent news, JPMorgan has initiated coverage on Corporacion America Airports SA (NYSE:CAAP), assigning it an Overweight rating with a price target of $22.50. This target suggests a potential upside of 25%, with further gains possible due to anticipated regulatory rebalances. The analyst from JPMorgan highlights several factors supporting this positive outlook. The valuation of CAAP is noted to be attractive, trading at 5.7 times its estimated 2025 enterprise value to EBITDA ratio, which is approximately a 30% discount compared to its peers. Additionally, CAAP is expected to generate strong and sustainable free cash flow, yielding an average return of 11% over the next three years. Ongoing regulatory discussions could potentially increase the fair value of CAAP by more than 30%, serving as a catalyst for future performance. The company’s history of successful inorganic growth and potential future opportunities further bolster this optimistic view. Despite the positive assessment of CAAP, JPMorgan continues to recommend ASUR as its top pick within its Latin America airports coverage.
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