We recently compiled a list of the 10 Best Airport Stocks To Buy. In this article, we are going to take a look at where Flughafen Zürich AG (OTC:UZAPF) stands against the other airport stocks.
Passenger Traffic Rebound: Airport Industry Poised for Growth
The airport industry plays a crucial role in facilitating global connectivity, enabling the movement of people and goods across borders. The performance of the airport sector can significantly influence economic growth and development worldwide.
Passenger traffic in the global air travel industry is experiencing a strong rebound as it recovers from the impact of COVID-19. According to Airports Council International (ACI), global passenger volume is projected to reach approximately 8.7 billion in 2023, which is 95% of the pre-pandemic levels seen in 2019. This represents a significant year-over-year growth of 31% from 2022 levels. Looking ahead, 2024 is expected to be a landmark year, with passenger numbers predicted to surpass 2019 levels for the first time since COVID-19, reaching around 9.7 billion passengers, or 106% of the 2019 volume. This represents a 12% year-over-year growth from 2023 levels.
The long-term outlook for the airport and air travel industry is also promising, with total passenger traffic expected to grow at a compound annual growth rate (CAGR) of 4.3% from 2023 to 2042. ACI forecasts indicate that by 2042, global passenger traffic could nearly double the 2024 projection, reaching close to 20 billion passengers.
However, factors such as high global inflation, slowdown of global GDP, extreme weather events, and geopolitical conflicts could introduce substantial risks and uncertainties in future forecasts.
Prioritizing Sustainable Growth and Efficiency
As the airport industry expands, sustainability and efficiency have become key focuses. Airports are implementing energy-efficient lighting and exploring the use of sustainable fuels to lessen their environmental impact.
London Heathrow Airport, one of the busiest airports in the world, is among the airports that are committed to sustainability. Since 2017, the airport has been sourcing 100% renewable electricity to power its terminals. As part of its sustainability strategy, the airport aims to cut carbon emissions on the ground by at least 45% by 2030 compared to 2019 levels. This includes enabling passengers to access the airport sustainably, transitioning to zero-carbon vehicles, and investing in efficient infrastructure.
Airports are committed to optimizing operations and enhancing the passenger experience, while also making significant investments in infrastructure upgrades to support future growth.
On August 30, Bloomberg reported that Schiphol Group NV, the owner of Amsterdam Airport, has announced a significant investment of EUR 6 billion ($6.7 billion) over the next five years to upgrade the airport’s infrastructure. This investment is the largest in the airport’s history and it will focus on renewing essential systems such as baggage handling, climate-control systems, escalators, and taxiways. The airport is also seeing a recovery in passenger traffic, with expectations of welcoming between 65 million and 68 million travelers in 2024.
The airport industry remains resilient and focused on delivering a seamless and sustainable travel experience for passengers. With continued investment and innovation, the sector is well-positioned for long-term growth and success. Now that we have discussed some of the key trends in the global airport industry, let’s take a look at the 10 best airport stocks to buy.
Methodology
To compile our list of the best airport stocks to buy, we first consulted stock screeners from Finviz and Yahoo Finance, along with online rankings, to create an initial list of the largest publicly traded airport companies. From this list, we selected the stocks that analysts believe have the most potential for growth. We ranked the best airport stocks to buy based on their average price target upside potential according to analysts, as of September 11, 2024.
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A giant commercial airliner surrounded by mechanics and engineers, emphasizing the scale of the leasing and servicing company.
Flughafen Zürich AG (OTC:UZAPF)
Average Price Target Upside Potential According to Analysts: 20.39%
Average Share Price Target Projected by Analysts: $275.87
Flughafen Zürich AG (OTC:UZAPF) is the owner and operator of Zurich Airport, Switzerland’s largest airport, and is involved in managing several airports abroad. The company operates in various regions, including Latin America, where it is involved in the operation of eight airports. Flughafen Zürich AG (OTC:UZAPF) is currently constructing a new greenfield airport in Noida, India, to serve the Delhi metropolitan area. This international expansion will allow the company to leverage its expertise gained in Zurich to create new long-term revenue streams. The company’s core activities include operating transport hubs, managing commercial centers, and developing real estate.
The company’s strategic investments and international projects are expected to drive future growth and profitability, making it an attractive option for investors. In the first half of 2024, Flughafen Zürich AG (OTC:UZAPF) invested CHF 275.4 million in property, plant, equipment, and various projects, a significant increase from CHF 162.9 million in the previous year. This includes the development of landside passenger zones at Zurich Airport, which will expand retail and dining options and improve passenger flow by autumn 2027. In June, the company also completed the main phase of its new baggage sorting system at Zurich Airport, which will be replacing the old system fully by 2027.
Additionally, construction on the company’s largest international project in the Delhi area is entering its final phase, with Noida International Airport set to open as the city’s second airport by the end of April 2025. In the first half of 2024, additional licenses were awarded for ground handling, managing commercial areas, and key maintenance contracts.
Flughafen Zürich AG (OTC:UZAPF) also completed the operational take-over of Natal International Airport in Brazil in February 2024. The airport currently has a capacity of 6.5 million passengers annually and operates under a 30-year concession agreement.
With traffic numbers slightly exceeding expectations, Flughafen Zürich AG (OTC:UZAPF) reported strong financial results in the first half of 2024. Total revenue reached CHF 631.1 million, a 9% increase compared to the same period in 2023 and 107% of the 2019 figure. Aviation revenue grew by 13% to CHF 313.5 million, while non-aviation revenue increased by 7% to CHF 317.6 million. Revenue from foreign business increased by 20% to reach CHF 49 million in the first half of 2024.
The company’s EBITDA rose by 7% to CHF 346.8 million, up 14% compared to the first half of 2019. This led to a positive consolidated result of CHF 151.8 million, surpassing the previous best half-year result from 2019 by 6%.
Strong traffic numbers during the first half of the year positively impacted commercial revenue on both the airside and the publicly accessible landside. Total commercial and parking revenue rose by 5% compared to the first half of 2023, reaching CHF 133.8 million. Additionally, real estate revenue grew by 1% to a new all-time high of CHF 98.2 million, highlighting the strength of the real estate sector as a reliable business area for the company.
UZAPF is one of the best airport stocks to buy according to analysts. Analysts have a consensus buy rating on the stock and the 1-year median price target of $275.87 set by analysts indicates a potential upside of 20.39% from current levels.
Overall UZAPF ranks 5th among the best airport stocks to buy. While we acknowledge the potential of UZAPF as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than UZAPF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.