Atlantia: UBS upgrades to 'buy'

(CercleFinance.com) - UBS has upgraded its rating on the share of the Italian airport and motorway operator Atlantia (vs.
a previously neutral rating).

Having increased its 12-month target price for the share from 19 euros to 25.4 euros, this suggests upside potential of 14%.

The broker has three arguments that justify this upgrade. First, the group's cash generation is considered "attractive", with free cash flow of about one billion euros per year for the group's main assets, and even another 500 million euros, taking into account the group's recent investments in Abertis, Hochtief and Getlink. This is particuluarly important, as this year the group's dividend should ensure a yield of 6%.

In addition, UBS believes that the risks and costs arising from the tragic collapse of the Genoa motorway bridge last summer now appear "contained": Atlantia has booked a provision of 500 million euros in its accounts and the government has taken no action to cancel the concession, UBS points out.

Finally, the risk premium on Italian rates, to which Atlantia is "very sensitive" UBS says, has eased.



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