⏳ Final hours! Save up to 60% OFF InvestingProCLAIM SALE

Flughafen Zürich stock climbs as UBS upgrades rating to 'buy'

Published 04/12/2024, 15:02
Updated 04/12/2024, 15:04
© Reuters.
FHZN
-

Investing.com -- Shares of Flughafen (VIE:VIEV) Zürich AG (SIX:FHZN) rose following an upgrade by UBS, which revised its stock rating to "buy" from "neutral." 

The decision, announced in a research report on December 4, reflects UBS analysts' optimism about the company's growth potential and upcoming catalysts.

UBS identified three key factors likely to drive a re-evaluation of Flughafen Zürich's stock. First, the airport's board is set to update its dividend payout policy in early 2025, with a potential increase in dividends being a major driver of investor interest. 

UBS's base case assumes a 60% payout ratio but notes the possibility of a higher yield linked to a combined fixed and variable dividend structure. 

Such a move could elevate the stock's appeal, offering a yield between 3.8% and 4%, a historically low valuation for the company.

Second, the anticipated opening of the Noida International Airport in India, slated for April 2025, is expected to crystallize value for Flughafen Zürich's international operations. 

UBS estimates that Noida already represents about 8% of the company’s current market capitalization and predicts significant EBITDA growth from this asset in the coming years.

Lastly, UBS flags the potential for increased airline capacity allocated to Zurich Airport starting in 2026, driven by fleet expansions and operational shifts within its key partner, Lufthansa. 

This development could accelerate passenger traffic growth and further strengthen Flughafen Zürich’s earnings profile.

In addition to these factors, UBS has raised its price target for the stock to CHF 244 from a previous CHF 205, reflecting an adjusted sum-of-the-parts valuation. 

The new target incorporates higher valuations for the company's retail business and international operations. 

The stock, currently trading at CHF 217, has thus been positioned as undervalued relative to these projections.

UBS's analysts underline that Flughafen Zürich combines defensive characteristics with growth potential, supported by strong free cash flow and a manageable leverage profile. 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2024 - Fusion Media Limited. All Rights Reserved.