AENA: Prolonged Capex Cycle Will Pressure Future Free Cash Flow

Analysts have trimmed their price target on Aena S.M.E., S.A., nudging fair value modestly higher to about EUR 18.86 from roughly EUR 18.29, as they factor in a prolonged capex cycle and weaker free cash flow yields under the DORA III regulatory period.

Analyst Commentary

Bearish analysts have highlighted a more challenging risk reward profile for Aena S.M.E., pointing to a combination of elevated investment needs and softer free cash flow dynamics over the DORA III period. The recent downgrade and reduced price target underscore growing concern that current valuations may not fully reflect these headwinds.

Bearish Takeaways

• JPMorgan’s downgrade to Underweight, alongside a cut in its price target to EUR 21 from EUR 23, signals rising skepticism that Aena can deliver returns commensurate with its current valuation.
• Expectations for a prolonged capex cycle raise the risk of execution slippage and budget overruns, which could compress returns on invested capital and delay any meaningful re rating.
• Materially lower free cash flow yields anticipated under DORA III heighten concerns around Aena’s ability to fund investments while preserving balance sheet flexibility and shareholder returns.
• Bearish analysts caution that, with higher investment intensity and weaker cash generation, the margin for error on growth and regulatory assumptions has narrowed, increasing downside risk to the equity story.

What's in the News

• Aena S.M.E., S.A. confirmed its full year 2025 traffic guidance and reiterated expectations for 3.4% year on year passenger growth (company guidance).

Valuation Changes

• Fair Value has risen slightly, moving from approximately €18.29 to about €18.86 per share. This reflects a modest uplift in the underlying valuation model.
• Discount Rate has fallen significantly from around 9.44% to about 8.04%, indicating a lower assumed cost of capital in the updated analysis.
• Revenue Growth has edged down slightly, with long term assumptions reduced from roughly 3.10% to around 2.77% per year.
• Net Profit Margin has remained broadly stable, easing marginally from about 33.34% to approximately 33.16% in the revised projections.
• Future P/E has declined slightly from roughly 16.72x to around 16.06x, which signals a modest reduction in the multiple applied to forward earnings.