Deutsche Bank Upgrades Aena to 'Hold' on Favorable Spanish Tariff Ruling

Deutsche Bank has upgraded Spanish airport operator Aena to 'Hold' from a previous 'Sell' rating, citing a favorable regulatory outcome that alleviates prior concerns. The bank also raised its price target on the stock to €24 from €20, according to a note from analyst Harishankar Ramamoorthy.

Tariff Approval Eases Risk

The upgrade follows a decision by Spain’s Council of Ministers to approve a 0.33% annual increase in airport tariffs under the new Dora III regulatory plan. This development marks a significant reversal of expectations for Deutsche Bank, which had previously forecast an approximate 2% annual decline in tariffs.

The bank's earlier bearish stance was based on a stronger passenger growth assumption of a 3.5% compound annual growth rate (CAGR) for the 2025-2031 period. The official projections in the Dora III plan are more conservative, easing the pressure for tariff reductions.

Details of the Dora III Framework

The Dora III plan outlines a total investment of approximately €13 billion for Aena. Key projections within the framework include:

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• Passenger numbers are forecast to grow from 321 million in 2025 to 346 million in 2031.
• This implies a modest CAGR of 1.3%, a significantly lower figure than Deutsche Bank had modeled.
• For context, Aena’s year-to-date passenger growth in Spain currently stands at 4.1%.

'Generous' Return on Assets

Deutsche Bank noted that the implied return allowed on Aena's regulatory asset base (RAB) under the new plan is likely to be above 8%. The analyst described this outcome as “generous,” considering Aena had initially sought a 9% return while the Spanish regulator, CNMC, had proposed 7.4%.

Despite the upgrade and increased price target, Aena’s shares last closed at €25 on September 15, trading slightly above the bank's new target. This valuation likely underpins the 'Hold' rating rather than a more bullish 'Buy' recommendation.