After first half earnings Morgan Stanley believes Transurban Group's near-term growth prospects and portfolio diversity provide investor appeal, offsetting traffic uncertainty.

The company's proportional average daily traffic (ADT) was down -19% in the December quarter versus the pcp though showing sequential improvement versus -33% in the September 2020 quarter. 

The analyst notes rising bond yields are a valuation headwind, albeit the reflationary outlook favours the company relative to other bond proxy stocks in Morgan Stanley's coverage.

Equal-weight and target of $14.50 retained. Industry view: Cautious.

Sector: Transportation.

Target price is $14.50.Current Price is $12.95. Difference: $1.55 - (brackets indicate current price is over target). If TCL meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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