BNP Paribas on Wednesday moved Zurich Airport to an Outperform rating from Neutral and increased its price objective to CHF277, an 8% upward revision from its prior target. The bank also designated the Swiss airport operator as its sector Top Pick, arguing current market weakness driven by geopolitical tensions goes beyond what the firm considers justified.
Analyst Dario Maglione said the share price reaction since the Middle East conflict implies a permanent 13% decline in traffic versus the banks February forecasts - a downgrade he views as excessive. Maglione added that the market appears to be underestimating Zurich Airports regulated business.
BNP Paribas described Zurich Airport as a "quality compounder," projecting an after-tax return on capital employed of 8-10%, which it expects to remain sustainably above the companys cost of capital of 5-6%.
On traffic forecasts, the bank expects Zurich-specific passenger volumes to rise by 4.2% year-on-year in the current period, compared with a year-to-date increase of 6.4%. Summer capacity at the airport is planned to be up about 6% year-on-year.
The brokerage highlighted several supports for traffic growth in 2026, including the airports affluent catchment area, potential redirected traffic from the Middle East, exposure to the SWISS airline and lower airport tariffs, which BNP Paribas notes are down 10% year-on-year.
BNP Paribas forecasts the airports Commercial division will expand EBITDA by roughly 30% through 2030, driven by a continuing expansion plan. That commercial growth is expected to underpin a mid-single-digit compound annual growth rate in EPS to 2030.
On estimates versus consensus, the bank said its FY26 EPS projections are about 6% above Street consensus, while its FY27 EPS view is roughly 6% below, with the variance mainly attributed to the expected contribution from the Noida airport. BNP Paribas noted Zurich Airport has the optionality to monetise its stake in Noida in 2027.
Valuation metrics at current share levels show trading at about 10.3x EV/EBITDA on FY27 numbers, consistent with historical averages excluding the COVID period. The shares also offer a dividend yield near 3.2%, which BNP Paribas describes as a historically wide spread versus the Swiss 10-year bond yield.
Leverage at the group is low by the banks measures, with net debt equivalent to approximately 1.8x its FY26 estimated EBITDA - a factor BNP Paribas highlighted as reassuring.
The broker explained that the regulatory rollover mechanism provides downside protection for both earnings and valuation within the regulated business. In the nearer term, the note suggested immigration could support traffic growth.
In rolling its valuation forward to FY27 as part of the upgrade, BNP Paribas concluded the risk/reward profile is tilted to the upside and elevated Zurich Airport to its Top Pick recommendation. The bank identified geopolitical developments and the Swiss immigration referendum scheduled for June 14 as primary catalysts to monitor.