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Investing.com -- J.P. Morgan has downgraded Fraport (ETR:FRAG) to “neutral” from “overweight,” after a year-to-date share price increase of 27%, which outpaced peers Aéroports de Paris, Aena, the infrastructure sector and the wider market, in a note dated Friday.
The brokerage said the gains have eroded much of the upside it previously saw in the stock, particularly as the performance has not been matched by earnings upgrades.
The downgrade follows Fraport’s second-quarter results and management comments that suggested 2026 capital expenditure could be as high as €900 million.
"Although this was swiftly retracted, we understand from subsequent conversations with the company that an estimate in the vicinity of €800m is reasonable," said analysts at J.P. Morgan.
The brokerage lifted its 2026 capex forecast by about 11% to €800 million and its 2027 forecast by about 30% to €650 million, pushing back the expectation for maintenance capex of €500 million to 2028.
The higher spending outlook is expected to slow the recovery in free cash flow. J.P. Morgan’s forecasts for Fraport’s free cash flow yield have been cut from 5% to 4% in 2026 and from 10% to 8% in 2027.
The bank said that although Fraport is still the only major European airport operator with declining capex in coming years, execution risk has increased following the recent revisions.
The brokerage also made small downward adjustments to its 2025 EBITDA estimate, reflecting a 3.6% cut to revenue forecasts, partly due to a slight reduction in projected passenger traffic at Frankfurt Airport.
Net income estimates for 2025 were lowered by 13.7% to €375 million, with J.P. Morgan noting that non-cash foreign exchange effects at Antalya Airport accounted for most of the cut.
Despite raising its December 2026 price target from €66 to €73, citing higher valuations for some international assets and changes in its discounted cash flow model, the brokerage said the target implies about 3% downside from the current share price.
It also noted that Fraport now trades at the highest valuation among its peers, with a 12-month forward EV/EBITDA of 11x, compared with Aena at 10.8x and ADP at 9.1x.