On Friday, Redburn-Atlantic adjusted its stance on Aeroports de Paris (ADP:FP) (OTC: ARRPY), raising the stock from Neutral to Buy and setting a new price target of €140.00. This change reflects the firm's optimism about the upcoming reverse merger involving ADP's stake in the Indian Airport Operator, GIL.
The political disturbances in France have recently affected Aeroports de Paris, causing the company's valuation to drop. However, the value of ADP's investment in GIL has surged to approximately €6 billion, accounting for 56% of ADP's market capitalization. Redburn-Atlantic anticipates that the forthcoming reverse merger will enhance the visibility and liquidity of ADP's stake in GIL, which is seen as a positive development for the company.
Aeroports de Paris is currently trading at a forward EV/EBITDA multiple of 7x, which is a 25% discount compared to its industry peers. Redburn-Atlantic suggests that a full revaluation could lead to a 57% increase in ADP's share price if its GIL investment is valued at market rates.
The new price target of €140.00 represents a 20% upside potential from the current levels. Redburn-Atlantic's upgrade to a Buy rating is based on the expectation that the reverse merger will provide significant benefits to Aeroports de Paris by highlighting the value of its holdings in GIL.
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