FER: Margin Gains And Stock Split Will Support Balanced Returns

Narrative Update on Ferrovial

Analysts have modestly lifted their price target on Ferrovial, citing improving profit margins and a slightly lower future P E multiple. Their fair value estimate has moved from approximately EUR 53.18 to EUR 53.86 following recent target increases on the Street, including a move to EUR 52.50.

Analyst Commentary

Recent commentary from bullish analysts reflects growing confidence in Ferrovial's earnings trajectory and balance of risk and reward around the stock's current valuation.

Bullish Takeaways

• The latest price target increase to EUR 52.50 signals rising conviction that Ferrovial can deliver above consensus earnings growth over the medium term.
• Bullish analysts see scope for continued margin expansion, which could support multiple resilience even as expectations normalize.
• They highlight Ferrovial's exposure to long duration infrastructure assets as a key driver of steady cash flow growth and support for a premium valuation.
• Execution on existing projects is viewed as solid, reducing perceived downside risk to forecasts and justifying incremental upside to target prices.

Bearish Takeaways

• Bearish analysts caution that, after recent target hikes, the upside to current trading levels may be limited if margin gains slow or normalize.
• They note that expectations for sustained growth are increasingly reflected in the valuation, leaving less room for error on project execution.
• There is concern that higher rate environments could weigh on infrastructure multiples, constraining further re rating potential.
• Any delays or cost overruns on large scale projects could quickly erode the incremental value implied by the new price targets.

What's in the News

• Announced a stock split or significant stock dividend at a ratio of 1 to 2.09688, effective October 28, 2025, aimed at increasing share liquidity (Key Developments)

Valuation Changes

• The fair value estimate has risen slightly from approximately €53.18 to €53.86, reflecting modest upside to the intrinsic valuation.
• The discount rate has increased marginally from about 7.68 percent to 7.70 percent, implying a slightly higher required return on equity.
• Revenue growth has edged down from roughly 3.93 percent to 3.79 percent, indicating a small tempering of medium-term top-line expectations.
• The net profit margin has increased meaningfully from around 8.05 percent to 9.08 percent, suggesting improved operating efficiency and profitability assumptions.
• The future P/E has fallen moderately from about 55.9x to 50.5x, pointing to a less demanding valuation multiple embedded in the updated model.