Why Credit Suisse says the Transurban (ASX:TCL) share price could be a bargain

Is it time to buy Transurban shares?

| More on:
Transurban share price WestConnex A single car on a normally busy highway exchange, indicating a falling share price in ASX road toll and car companies

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Transurban Group (ASX: TCL) share price has been underperforming so far in 2021.

Since the start of the year, the toll road operator's shares have risen just 1% to $13.75.

This compares unfavourably to the S&P/ASX 200 Index (ASX: XJO) and its solid 11% gain over the same period.

Is the Transurban share price good value?

According to a note out of Credit Suisse, its analysts believe the Transurban share price could be good value at the current level. This follows the release of the company's first quarter update last week.

That update revealed a significant decrease in overall average daily traffic year on year, due to lockdowns in key markets. Transurban reported overall average daily traffic (ADT) volumes down 12.4% year on year and 34.5% when compared to 2019.

However, this wasn't as bad a Credit Suisse was expecting. In light of this and the earlier than forecast reopening of Melbourne and Sydney from lockdowns, the broker has upgraded its earnings and dividend estimates materially.

Estimates upgraded

The broker is now forecasting dividends of 41.5 cents per share in FY 2022 and then 61.5 cents per share in FY 2023. Based on the current Transurban share price, this implies yields of 3% and 4.5%, respectively.

In addition, Credit Suisse has retained its outperform rating and increased its price target on the company's shares to $15.15. This suggests there's upside of 10% for its shares over the next 12 months.

And if you add in dividends, the potential return on offer stretches to over 13% for investors.

All in all, while the Transurban share price has underperformed this year, Credit Suisse appears to see this as a buying opportunity now.

Should you invest $1,000 in Transurban Group right now?

Before you buy Transurban Group shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Transurban Group wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 6 March 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Share Market News

Which ASX sectors led the pack in March, according to Macquarie?

It was a volatile month for ASX 200 shares...

Read more »

Silhouettes of nine people climbing a steep mountain to the top at sunset, and helping each other along the way.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX was rocked by 'Liberation Day' this Thursday.

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Superannuation

AustralianSuper sticks with US stocks despite recent turmoil

AustralianSuper’s head of international equities says they won't be shifting focus to Europe.

Read more »

Smiling man sits in front of a graph on computer while using his mobile phone.
Opinions

2 compelling ASX shares I'd buy now following the tariff stock market pain

These investments could make excellent buys in the current market sell-off.

Read more »

Child drinking milk out of a glass.
Share Gainers

Guess which ASX All Ords share just rocketed 12% in today's crashing market?

This ASX All Ords share is surging today despite the Trump tariff market turmoil. But why?

Read more »

Excited couple celebrating success while looking at smartphone.
Share Gainers

Why Astral, Newmont, Ramelius, and Synlait shares are defying the market selloff and rising

These shares are rising despite the market weakness today. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why ANZ, Breville, Cettire, and Treasury Wine shares are dropping today

These shares are having a tough time on Thursday. But why?

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Share Market News

How are ASX 200 investors responding to the new Trump tariffs today?

Australia didn’t escape the new Trump tariffs. Here’s how ASX investors are repositioning today.

Read more »