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On Tuesday, Citi updated its financial model for Corporacion American Airports SA (NYSE:CAAP), resulting in a revised price target of $20.00, decreased from the previous $21.00. The firm continues to recommend a Buy rating on the shares. The adjustment reflects several factors, including an anticipated decline in Ecuadorian traffic for 2024, an increase in tax expenses, and a stronger fourth quarter 2023 EBITDA projection.
The enhanced EBITDA forecast for Q4 2023 is attributed to inflation rates in Argentina outpacing the country’s currency depreciation against the US dollar, which has led to a rise in dollar-denominated EBITDA. Consequently, Citi has raised its earnings per share (EPS) estimate for the global airport operator for the fourth quarter of 2023 from $0.17 to $0.19.
Citi’s full-year EPS projections for Corporacion American Airports have also been updated. The estimates for the years 2023, 2024, and 2025 have been modified from $1.09, $1.40, and $3.05 to $1.11, $1.27, and $2.97, respectively. These changes are based on the latest financial model which incorporates the recent data.
The lowered price target of $20.00 per share is derived from Citi’s discounted cash flow (DCF) analysis, which factors in the aforementioned adjustments. Despite the reduction in the target price, the Buy rating indicates that Citi remains optimistic about the stock’s potential performance.
Corporacion American Airports SA, which operates a number of airports across the globe, is navigating various economic conditions that can impact its financial outcomes. The adjustments by Citi reflect the ongoing analysis of such factors and their potential influence on the company’s earnings and valuation.
InvestingPro Insights
Recent data from InvestingPro provides a more nuanced view of Corporacion American Airports SA’s (NYSE:CAAP) financial health and market position. The company’s market capitalization stands at $2.43 billion, with a P/E ratio of 15.63, which has been adjusted to 17.39 for the last twelve months as of Q3 2023. This valuation suggests a company with a strong free cash flow yield, an InvestingPro Tip indicating that investors might find value in the stock’s cash-generating ability relative to its share price.
Additionally, CAAP has shown robust revenue growth of 32.87% over the last twelve months as of Q3 2023, signaling a solid expansion in its operations. This aligns with Citi’s observation of the company’s stronger EBITDA projection for Q4 2023 due to favorable inflation rates in Argentina. The company’s stock price has also experienced significant appreciation over the past year, with a one-year price total return of 62.78%, reflecting investor confidence and market performance that outpaces many peers.
Investors should note that while CAAP’s P/E ratio indicates a premium valuation relative to near-term earnings growth, the company is expected to be profitable this year, as highlighted by another InvestingPro Tip. For those interested in a deeper dive into CAAP’s financials, there are 6 additional InvestingPro Tips available, which can be accessed through the dedicated page for CAAP on the InvestingPro platform. Moreover, users can take advantage of an exclusive offer by using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Corporacion American Airports’ financials and stock performance are evidently subject to various global economic conditions, and the insights from InvestingPro can help investors make more informed decisions. With the company not paying dividends, investors’ returns will primarily be driven by stock price appreciation, which, as per the data, has been quite volatile. The combination of strong revenue growth and a high return over the last year paints a picture of a company that, despite some short-term uncertainties, may offer long-term growth potential.
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