UBS cuts Transurban stock rating to neutral, lowers target

Published 18/04/2025, 12:26
UBS cuts Transurban stock rating to neutral, lowers target

On Friday, UBS analyst Simon Mitchell adjusted the rating for Transurban Group, a toll-road operator listed on both the Australian Securities Exchange (TCL:AU) and over-the-counter in the United States (OTC:TRAUF). The stock was downgraded from Buy to Neutral, with a revised price target set at AUD14.60, a slight decrease from the previous AUD14.85.

Mitchell notes that the downgrade follows a roughly 10% increase in Transurban’s share price over the past month. With the new 12-month price target indicating a total shareholder return (TSR) of approximately 10%, the upside potential for the stock is now viewed as less compelling.

Despite the downgrade, the analyst acknowledges several upcoming catalysts that could positively influence Transurban’s stock. These include anticipated stronger traffic growth, the unwinding of current network disruptions next year, continued delivery of cost savings, and the completion of the West Gate Tunnel (WGT) project. Additionally, more clarity is expected on the New South Wales toll reforms, which currently present an element of uncertainty for investors.

Mitchell also suggests that Transurban could attract more investor interest if broader market volatility persists or if bond yields decline further. While immediate developments may not be anticipated, the analyst believes that Transurban remains well-positioned for both organic and inorganic growth opportunities. This outlook contrasts with investor feedback, which has been somewhat pessimistic regarding the company’s growth project pipeline, potential risks from the Australian Competition & Consumer Commission (ACCC), and prevailing transaction multiples.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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