J.P. Morgan upgraded Aena SME SA to a "neutral" rating from "underweight" and raised its December 2027 price target to €24.00 from €21.00, citing the resolution of several negative catalysts that had weighed on the stock.
The change follows a roughly 16% fall in Aena shares from their peak earlier in the year and comes after the Spanish competition authority CNMC published its opinion on the company’s DORA III regulatory framework this week. J.P. Morgan said the CNMC publication removes a meaningful portion of the regulatory overhang that had been pressuring sentiment.
Valuation and modeling adjustments
In its update, J.P. Morgan lowered its weighted average cost of capital (WACC) assumption to 7.44%, matching the figure used by the CNMC. That compares with the 8.4% WACC previously applied by the broker. Using a blended discounted cash flow (DCF) and sum-of-the-parts (SOTP) approach, J.P. Morgan arrives at a fair value of €24 per share. Separately, the SOTP-only valuation produces €22 per share and the DCF-only valuation yields €25 per share.
The revised €24.00 target implies around 2% downside relative to Aena’s June 4 closing price of €24.38.
Regulatory outlook and near-term expectations
J.P. Morgan said it does not expect further negative developments on DORA III, anticipating that negotiations over the summer will likely produce a compromise between the CNMC position and Aena’s proposals. That reduced regulatory risk was a central reason cited for the rating move.
Operational performance and passenger trends
Aena’s passenger traffic has increased by 3.3% year-to-date, according to J.P. Morgan, a pace that outperforms several European peers including Aeroports de Paris and Fraport, while lagging Zurich Airport’s 6.1% growth. The bank also highlights that Aena is tracking well ahead of its own guidance, which calls for 1.3% year-on-year growth in 2026.
J.P. Morgan noted that passenger volumes have remained resilient despite the Iran conflict and suggested Aena could benefit from tourists shifting travel plans away from the Middle East during the summer season.
Financial projections
On the company’s income statement and cash-flow outlook, J.P. Morgan’s forecasts include:
- Revenue of €6.76 billion in FY26E, up from €6.38 billion in FY25A.
- Adjusted EBITDA rising to €3.99 billion in FY26E from €3.75 billion in FY25A, implying a 59% EBITDA margin.
- Adjusted EPS of €1.54 in FY26E versus €1.42 in FY25A.
Free cash flow to the firm is projected to decline to €1.18 billion in FY26E from €1.44 billion in FY25A, before partially recovering to €1.43 billion in FY27E and falling again to €941 million in FY28E. The firm’s model shows capital expenditure as a share of sales climbing sharply from 11.3% in FY25A to 33.6% in FY28E.
Net debt is forecast to increase to €7.34 billion by FY28E from €5.51 billion in FY25A, with the net debt-to-EBITDA ratio moving to 1.7x from 1.5x.
Dividends and peer positioning
J.P. Morgan flags a forecast dividend yield of around 5% for 2026 as a supporting factor for the neutral rating. The broker also maintained an "overweight" rating on Fraport, cited at a price of €67.50, noting that falling capital expenditure is driving a free cash flow inflection and that Fraport may be more exposed to any positive Middle East developments.
Takeaway
The broker’s move reflects a recalibration of regulatory risk following the CNMC’s DORA III opinion and a lower WACC in its model. Operationally, Aena’s traffic recovery and a near-term dividend yield projection are cited as additional pillars supporting a neutral view, while the company’s cash-flow profile is expected to be impacted by higher capex in later years.