On Friday, JPMorgan (NYSE:JPM) raised its price target for Aeroports de Paris (ADP:FP) (OTC: ARRPY) to €150.00 from €140.00, while also upgrading the stock from Neutral to Overweight. The adjustment reflects the potential for upside due to several factors, including the anticipated recovery in traffic from China, the value of the company's stake in GMR/GAL, and the possibility of privatization.
The analyst from JPMorgan noted that traffic between Paris and China is currently at approximately half of the pre-COVID levels. Considering that Chinese traffic accounted for around 2% of pre-COVID traffic and approximately 15% of retail spend, a full recovery, potentially accelerated by recent stimulus packages, could significantly contribute to ADP's further recovery.
Additionally, the analyst highlighted the value of ADP's 45.7% stake in GMR/GAL. The stake is valued at €4.9 billion, compared to ADP's own market capitalization of €11 billion. This significant valuation suggests that there could be substantial upside for ADP should investors fully recognize this asset's value.
Lastly, the possibility of the French government revisiting proposals to privatize ADP was mentioned. Although not currently under discussion, such a move could be driven by France's budgetary pressures and, if it were to happen, is expected to be highly supportive of the share price, according to the analyst's comments.
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