On Friday, JPMorgan downgraded AENA SME SA (AENA:SM) (OTC: ANNSF), the Spanish airport operator, from Overweight to Neutral, while setting a new price target at €213. The downgrade comes after a significant year-to-date increase in the company's share price, which has risen 22%, and a 70% increase since the end of 2022. The bank cited that the stock's strong performance has already absorbed the positive aspects that previously supported a higher rating, diminishing the potential for further upside.
The analyst from JPMorgan pointed out that AENA's stock appreciation has largely factored in the strengths which were behind the Overweight rating, leading to a reduced potential in the price target. This reassessment of AENA's valuation follows the company's strategic plan for the period of 2027-2031, which anticipates a doubling of capital expenditures, translating to an additional €600 million annually. This figure represents around 30% of the firm's forecasted free cash flow (FCF) for 2026.
The ability of AENA to sustain its leading FCF yield is now under scrutiny, as it largely depends on the extent to which the regulator will allow these costs to be recouped through tariff increases during the next regulated period. The uncertainty surrounding this potential development poses questions for investors regarding the medium to long-term outlook of the stock.
Additionally, the analyst mentioned that external factors could impact AENA's share performance. Speculations about the company's interest in international acquisitions and concerns about the security of its ownership of Barcelona airport amid possible political changes in Catalonia could also add to the pressures on AENA's stock. These factors contribute to the rationale behind the downgrade and the new price target set by JPMorgan.
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