UBS has raised its target price for GEK TERNA to €55 per share, maintaining its “Buy” recommendation, as it believes the recent decline has created a particularly attractive entry point. Based on the closing price of €39.26 on 6 November, the new target implies upside of about 40%.
The focus is on the strong performance the group is expected to report in the third quarter, with estimates pointing to an 18% increase in revenue to €1.079bn and a 40% rise in adjusted EBITDA to €204m. A year earlier, the corresponding figures were €917m and €146m.
The Concessions segment is expected to be the main growth driver, contributing €135m in EBITDA. It is followed by Construction, with €54m, and Energy, with €19m.
Particular importance is attached to the resilience of traffic on the motorways, which rose by 1.2% in the third quarter despite fuel price increases. The concessions portfolio also has an average remaining life of more than 20 years, providing long-term visibility on cash flows.
Recent market concerns that have weighed on the shares are considered excessive, as they fail to reflect the improvement in fundamentals and the group’s growth prospects. In addition, the group has significant exposure to Greece’s new infrastructure project programme, creating scope for further growth.
An indication of the valuation is that the shares trade at about 17 times estimated 2028 earnings. The current valuation does not fully reflect the combination of strong growth, additional sources of value creation and predictable cash flows offered by the portfolio.