Morgan Stanley | The transformation of Spanish construction firm Ferrovial (FER) into a quasi North America pure play infrastructure is underway with the service sales and construction reduction plan.
We raise the valuation of roads in the United States to €8bn (11 euros per share). We also raise the valuation of the 407ETR for the increase in rates. The combination of the three key assets, Heathrow, USA and 407-ETR are 85% of the target price and justify the current price of 29 euros. The rest up to the target price comes from an increase in FCF in 2020-27e and possibilities of increase in dividend.
Ferrovial, Overweight, Target Price from 24.41 to 34.40 euros.