Investing.com -- Bernstein analysts have resumed coverage of Vinci (EPA:SGEF) with an "outperform" rating and a price target of €141.1 per share, signaling strong confidence in the infrastructure giant’s prospects.
This represents an upside from the current trading price, underscoring Bernstein’s bullish stance on the company.
Vinci’s diversified business model, comprising both defensive and cyclical segments, is a key factor in this positive outlook.
Its concessions business, which includes French motorways and airports, continues to provide stable, predictable cash flows, with growth driven by rising traffic and inflation-linked tariff adjustments.
Meanwhile, Vinci’s contracting segment, which includes Vinci Energies, Vinci Construction, and Cobra IS, is supported by strong order backlogs and attractive free cash flow generation.
A notable insight from Bernstein’s valuation analysis is that the market appears to be undervaluing Vinci’s domestic toll roads.
The brokerage’s reverse valuation suggests that, at current share prices, investors are implicitly assigning a negative value to these assets despite their reliable cash flow generation.
Similarly, Vinci’s contracting units are trading at a considerable discount to Bernstein’s net asset value (NAV) estimate, suggesting hidden value within the business.
In addition to its financial strength, Vinci’s management team and environmental, social, and governance (ESG) credentials contribute to its attractiveness as an investment.
The company has a strong track record of capital allocation and delivering shareholder returns, with a sustainable dividend yield projected at around 4.1% for 2025.
Bernstein also flagged Vinci’s recent €400 million bond issuance, which was successfully placed and will mature in 2030.
This issuance further strengthens Vinci’s financial position and underscores investor confidence in its long-term prospects.
While uncertainties persist, including the potential impact of political decisions on infrastructure assets and broader economic headwinds, Bernstein sees Vinci as well-positioned to navigate these challenges.
The brokerage’s sum-of-the-parts (SOTP) valuation underscores Vinci’s inherent value, with significant upside potential should the market correct its current mispricing.