(News Bulletin 247) – The Swiss bank raised its price target on the stock to 127 euros on Monday, and estimates that the bank could release more than 28 billion in cash over the next five years.

For UBS, the construction and concessions group Vinci still offers significant potential. The Swiss bank reiterated its buy opinion on Monday and raised its target price to 127 euros against 122 euros previously, or nearly 17% more than the current price of 109 euros on Monday afternoon.

The Xavier Huillard-led company recently released its annual results, impressing analysts with its cash generation. In 2022, the company thus generated record free cash flow of 5.43 billion euros, more than one billion euros above consensus expectations, which earned the CAC 40 member to be nicknamed by Barclays the “king of cash”.

“Vinci has gotten investors used to under-promising and over-promising on cash, but that’s particularly visible here, as most investors feared a normalization after two years of bumper delivery,” the UK bank explained.

A growing dividend

For UBS, the group is even a “cash machine”. The Swiss bank considers that the company will continue to generate a robust free cash flow even if, a little less strong than previously.

It expects a figure of 4.4 billion euros this year. Cumulatively, over five years, 28 billion euros in cash (and 26 billion euros after payment of dividends to minority shareholders) will be generated, forecasts UBS, which leaves the group significant room for maneuver to its investments or external growth operations.

This generation of cash should also delight the group’s carriers. UBS expects that of the 28 billion euros in free cash, 14 billion euros will be returned to shareholders in the form of an increase in the dividend payout ratio, with a gradual increase to 60% of the result net (compared to 53.5% for 2022).

Over the next five years, the establishment thus anticipates an average annual increase of 8% in the dividend per share and 6% in earnings per share, excluding significant mergers and acquisitions.

“The action still looks attractive”, judge UBS who sees several “carrying winds” for the title. She cites in particular the need for investment in Europe in the energy transition, an area in which the group strengthened itself last year with the takeover of the Spanish Cobra IS, and the continued recovery of the activity of its division. of airports.

Airports and Energies as assets

UBS is not the only financial intermediary to put forward these arguments. Last week, Barclays also revised its price target upwards to 120 euros and confirmed its recommendation to “overweight”. The establishment judged that the market did not appreciate the fair value of the improvement in the profitability of its airports division and its prospects in energy.

“Vinci is rightly recognized as a defensive cash cow, but we believe investors don’t give it enough credit for its airport operating leverage and potential growth in the Energies/Cobra IS business,” said Vinci. thus explained the British bank.