The Market Has Already Factored in Transurban's Recovering Traffic

We maintain our AUD 12.00 per-share fair value estimate for wide-moat Transurban Group following its 2021 investor day, which highlighted recovering traffic volumes and the large development pipeline, which may get a boost in the U.S. by an increasing focus on improving infrastructure. But there weren't any major revelations and we maintain our view. Incorporating recent traffic data, we marginally downgrade our near-term earnings forecasts for North America and Melbourne, however, this is offset by upgraded earnings forecasts for Sydney. At the current share price, Transurban screens as moderately overvalued, trading 17% above our fair value estimate. It offers investors a modest fiscal 2021 distribution yield of 2.6%, though distributions are likely to double over the next five years.