Morgan Stanley upgrades to Overweight from Equal-weight, in view of the recent underperformance in the stock and the value relative to global listed airports, as well as Australian infrastructure stocks.
The broker acknowledges investors may be wary of passenger growth this year, as airports are cycling higher comparables and forward capacity data is pointing to moderating near-term growth.
The broker believes Sydney Airport has the best potential returns in the grouping and will benefit from a diversity of traffic sources. Target is reduced to $7.07 from $7.47. Industry view is Cautious.
Target price is $7.07.Current Price is $6.60. Difference: $0.47 – (brackets indicate current price is over target). If SYD meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).