The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price was on form yesterday following the announcement of a travel bubble between Australia and New Zealand.
The airport operator's shares pushed almost 3% higher to finish the day at $6.24.
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Where next for the Sydney Airport share price?
One broker that believes the travel bubble between Australia and New Zealand will be a big boost to Sydney Airport is Goldman Sachs.
In response to the news, this morning the broker reiterated its buy rating and $6.73 price target on the company's shares.
Based on the latest Sydney Airport share price, this implies potential upside of almost 8% over the next 12 months.
What did Goldman say?
Goldman Sachs believes that the travel bubble, which is due to open on 18 April, will deliver a much-needed return in international passengers through Sydney Airport's gates, which will ultimately reduce retail lease abatement.
The broker commented: "Trans-Tasman volumes accounted for 14% of SYD's total international in CY19 and the proposed move allows for international capacity to return. More importantly, it allows for international retail and duty-free business to recommence."
"We are Buy-rated on SYD.AX. We maintain that SYD remains in an effective hibernation and expect SYD to be a major beneficiary of the Australian domestic inoculation strategy, if it facilitates relaxation of border restrictions."
What about other airports?
The broker is less positive on Auckland International Airport Limited (ASX: AIA). It currently has a neutral rating and NZ$7.08 price target on its NZ shares. This compares to the current Auckland International Airport share price of NZ$7.75.
Goldman said: "Trans-Tasman volumes accounted for 31% of AIA's total international in CY19. The AIA management indicated the business would be break even under a trans-Tasman bubble scenario."
"We are Neutral-rated on AIA.NZ. AIA's profitability remains tied to a recovery in international passenger movements, which is 97% below pre-Covid-19 levels and remains tied to the NZ government's conservative border closure policies. That said, the company has limited cash burn (GSe NZ$10mn/mth) and solid available liquidity (NZ$1.6bn)," it concluded.
