Macquarie upgrades Atlas Arteria to Outperform from Hold, noting the company is trading slightly below fair value, and that the APRRR concession and likely improved certainty towards Greenway should combine with the attractive dividend to spur desire.
Target price rises 35c to $6.87 to reflect improved cash flow and a 30 basis point cut in bond forecasts.
Macquarie tinkers with Atlas Arteria’s earnings estimates, shaving -1.2% off FY21, adding 0.2% to FY22; and cutting -2.8% from FY24, expecting the improved Greenway traffic outlook will fall foul of the currency outlook.
The company’s investor day met expectations, the 100% distribution policy intact, and the company continuing to adopt a legislation solution to the Greenway toll-road-to-concession settlement. October inflation fell at 2.6%, compared to the broker’s forecast 2.1%, which should boost toll revenue.
Sector: Transportation.
Target price is $6.87.Current Price is $6.68. Difference: $0.19 – (brackets indicate current price is over target). If ALX meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges – negative figures indicate an expected loss).
