Positive Ferrovial roadshow feedback, with 407 ETR's long-term pricing potential remaining the key highlight

Overview

This report is Goldman Sachs' feedback following an investor meeting with Ferrovial management in Paris. Core discussion topics included long-term traffic and pricing dynamics, new project opportunities, and Ferrovial Construction. The report concludes that the information conveyed in the roadshow is consistent with Goldman Sachs' current positive view on the stock and is slightly more constructive.

Core views

Goldman Sachs believes that Ferrovial's most important post-pandemic trend is the pricing and earnings upgrade cycle at 407 ETR. 407 ETR accounts for about half of Goldman Sachs' forecast FER free cash flow and SOTP. Over the past few years, pricing catch-up has gradually shifted toward more proactive and more refined revenue management. The company believes this process is still at an early stage, and Goldman Sachs continues to believe that market consensus underestimates 407 ETR's long-term pricing potential. Beyond 407, the company remains focused on GTA infrastructure improvements, North American managed lanes and airport projects, while the construction business maintains its long-term average margin target of 3.5%.

Analysis framework

The report is primarily based on exchanges during the management roadshow, providing qualitative analysis of 407 ETR pricing, traffic volumes, Highway 413, autonomous driving, capital allocation for new projects, and construction business margins, and combines this with Goldman Sachs' existing SOTP framework, free cash flow forecasts, and relative coverage rating system to form its investment view.

Methodology notes

• Valuation methodsSOTP

  sum-of-the-parts valuation

  Goldman Sachs sets a 12-month target price of €60 for Ferrovial based on SOTP, and notes that 407 ETR accounts for about half of its forecast free cash flow and SOTP, while the construction business, excluding listed Budimex, represents only about 1% of equity value.

• equity ratingGoldman Sachs Buy/Neutral/Sell

  relative coverage total return rating

  Goldman Sachs' Buy rating reflects the stock's total return potential relative to its coverage universe; this report maintains a Buy rating on Ferrovial.

• factor analysisGS Factor Profile

  Growth, Financial Returns, Multiple, and Integrated factor profile

  GS Factor Profile compares stocks based on growth, financial returns, valuation multiples, and integrated percentiles, using Goldman Sachs analyst forecasts and relative assessment versus the market and industry peers.

• M&A scenarioM&A Rank

  acquisition target probability score

  Goldman Sachs discloses that its globally covered stocks can be assessed for potential acquisition probability under the M&A framework, where 1 represents high probability, 2 medium probability, and 3 low probability; if ranked 1 or 2, the target price may incorporate M&A factors.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Ferrovial SE

  research target

  Strengths

  Owns high-quality infrastructure assets, with 407 ETR offering strong pricing and compounding capabilities; new projects focus on U.S. managed lanes and airports; the construction market is in an upcycle.

  Weaknesses

  The construction business carries relatively low weight in the equity story and accounts for only about 1% of equity value in Goldman Sachs' SOTP after excluding Budimex.

  Comparison

  The report says Ferrovial's assets have typically outperformed market expectations because their pricing and compounding capabilities are systematically underestimated; the competitive landscape for managed lanes is similar to the past.

  Risks

  Congestion penalties, real interest rates, foreign exchange, regulation, and traffic volumes falling short of expectations.

• 407 ETR

  core asset / main valuation and cash flow contributor

  Strengths

  Accounts for about half of Goldman Sachs' forecast FER free cash flow and SOTP, with long-term pricing potential and more refined revenue management as the core sources of upside.

  Weaknesses

  Traffic volumes may be affected by new highway construction, regulation, or congestion-related mechanisms.

  Comparison

  Compared with market consensus, Goldman Sachs believes 407 ETR's long-term pricing potential remains underestimated.

  Risks

  Traffic volumes below expectations, higher-than-expected congestion penalties, and regulatory pressure.

• Highway 413

  external infrastructure project that could potentially affect 407 ETR traffic volumes

  Strengths

  The company believes the net impact of growth and urban development in northern GTA may be favorable to 407 traffic volumes.

  Weaknesses

  Goldman Sachs previously estimated it could lead to a low-single-digit reduction in traffic volumes in the medium term.

  Comparison

  The company's view is more positive than Goldman Sachs' 2021 estimate of a low-single-digit negative impact.

  Risks

  Traffic redistribution after project completion could affect 407 ETR.

• Ferrovial Construction

  business segment

  Strengths

  Maintains a long-term average margin target of 3.5%, market trends remain in an upcycle, and rising valuations of U.S. construction companies provide background support.

  Weaknesses

  Receives less attention in Ferrovial's equity story and has limited SOTP contribution.

  Comparison

  Compared with rising valuations of U.S. construction companies, Ferrovial's own construction activity is still not the core valuation focus.

  Risks

  Cycle downturn, project execution, and margins below target.

Key data

• Report date2026-05-19The front page of the main text shows 19 May 2026 | 4:06PM CEST.
• RatingBuyGoldman Sachs explicitly states that it maintains a Buy rating on Ferrovial.
• 12-month target price€60The target price is based on the SOTP method.
• Disclosed price€57.30Ferrovial SE (€57.30) is listed in the company-specific disclosures.
• 407 ETR contributionAccounts for about half of forecast FER FCF and SOTPThe report emphasizes that 407 ETR is a key asset in Ferrovial's investment thesis.
• Highway 413 impactPotential low-single-digit medium-term traffic declineGoldman Sachs' 2021 bottom-up estimate; management is more optimistic about the net impact from growth in northern GTA.
• Long-term construction margin target3.5%The company maintains its long-term average construction margin target.
• Ferrovial Construction equity value shareAbout 1%In Goldman Sachs' SOTP, FER Construction excluding listed Budimex accounts for only about 1% of equity value.

Impact & implications

For investors, this roadshow reinforces the medium- to long-term thesis for Ferrovial as a portfolio of high-quality infrastructure assets: 407 ETR pricing and revenue management may continue to drive upgrades to earnings and cash flow, North American managed lanes and airport projects provide capital allocation opportunities, and improvement in the construction business cycle is a supporting factor. Short-term earnings were not the focus of the meeting; the key lies in medium- to long-term traffic volumes, pricing power, and capital allocation.

Risks

• Higher-than-expected congestion penalties.
• Rising real interest rates.
• Foreign exchange volatility.
• Regulatory risk.
• Traffic volumes below expectations.
• Adverse impact on 407 ETR from new highway construction or traffic flow changes.
• Higher risk in managed lanes projects leading to higher required rates of return.

What to watch

• Whether 407 ETR's 2026 and subsequent pricing policies continue to reflect more proactive revenue management.
• Long-term traffic volume trends at 407 ETR and GTA population and economic growth.
• Progress on Highway 413 construction and its traffic flow interaction with 407 ETR.
• Capital allocation, bid return requirements, and competitive dynamics for U.S. managed lanes and airport projects.
• Whether Ferrovial Construction can maintain its long-term average margin target of 3.5%.
• Changes in real interest rates, foreign exchange, and the regulatory environment.