Celfin maintains buy rating for Aguas Andinas, increases target price

Financial services firm Celfin Capital has modified its forecast for Chilean water utility Aguas Andinas, maintaining its buy recommendation and increasing its 12-month DCF-based target price to 305 pesos per share. The new target price indicates potential stock price upside of 15.7%, and a total return of 22.7%, which includes the company's estimate of a 7% yield, Celfin said in a research report. The firm expects earnings per share (EPS) to grow 2.1% this year, an additional 18.8% in 2012 and 6.8% in 2013. Ebitda is expected to grow 5.9% in 2011, 13.5% in 2012 and 5.5% in 2013. This growth is due to an expected increase potable water and wastewater treatment volumes and higher average tariffs from inflation and incorporation of new assets. "We expect an attractive dividend this year, and a further attractive average dividend yield of 7-8% over the next three years," the report said.