Ferrovial SE

J.P. Morgan downgraded infrastructure company Ferrovial to "neutral" from "overweight" on Tuesday, saying disclosures around its I24 project win in Tennessee had not eased concerns over the wide gap between Ferrovial's bid and those of rival consortia. The brokerage cut its price target on Ferrovial to €50 from €65, citing higher cost-of-capital assumptions reflecting moves in bond yields and a change in the company's risk profile following the I24 project. A Ferrovial-led consortium won the 26-mile Nashville-to-Murfreesboro project with a $24.8 billion concession value, including an upfront payment of $1.5 billion, while two rival consortia bid $7.25 billion and $7.4 billion and a third sought a subsidy. The project carries a fixed-price construction contract worth $9.2 billion over eight years, with cost overruns borne by the consortium, and Ferrovial owns 65% of the project. J.P. Morgan said Ferrovial shares have fallen 16% since the I24 win, compared with an 8% decline for the infrastructure sector, and warned of potential downside later this month if Ferrovial wins the I285 East project in Georgia, where partner Transurban has withdrawn, leaving Ferrovial with 100% of the project.