There’s Value In Macquarie Airports

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This story features MICROBA LIFE SCIENCES LIMITED.
For more info SHARE ANALYSIS: MAP

By Chris Shaw

As has been the trend for several months Macquarie Airports ((MAP)) has delivered strong traffic growth numbers for October, with performance at the Sydney and in particular Brussels Airports more than offsetting some weaker than expected results from Copenhagen.

While the strong traffic numbers are a positive brokers are positive more for the value on offer in the stock that follows some recent share price weakness, as well as the potential for at least a portion of the $1.2 billion available on the group’s balance sheet to be returned to shareholders.

Even prior to the traffic numbers delivered yesterday UBS had upgraded its rating on the stock to Buy on valuation grounds, noting the stock has dropped around 9% from its recent highs.

Merrill Lynch attributes the fall to profit taking and some concerns from higher oil prices, but it too suggests the stock is good value at current levels. Citi agrees and like UBS has upgraded its rating to Buy, expecting either a share buyback or capital return will be announced in coming months.

If there is no capital management initiative undertaken it would mean the company is considering an acquisition, an outcome ABN Amro suggests is possible. Such a move would likely be a catalyst for further share price gains in the broker’s view, while it also sees scope for a boost from a likely good profit result when it reports next February.

The FNArena database shows the market overall remains very positive on the potential for the stock as it is rated as Buy eight times, Hold once and Avoid once. The average share price target is $4.80, which is unchanged following the release of the October traffic statistics and in line with the $4.82 median price target according to Thomson One Analytics.

Shares in Macquarie Airports this morning are little changed and as at 11.05am were 1c higher at $4.11, which compares to a range over the past 12 months of $3.37-$4.65.

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