Why this famous broker just upgraded Transurban Group shares

Urban toll road network player Transurban Group (ASX:TCL) has been upgraded to outperform by Macquarie.

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Urban toll road network company Transurban Group (ASX: TCL) has been upgraded to outperform by Macquarie after the Australian government proposed $5 billion of funding to build a rail connection to Melbourne airport on a 50:50 basis with the Victorian government.

Shares in Transurban have bottomed out in recent months, dropping from $11.90 at this time last year to today's $11.21 with plenty of volatility in between.

The Macquarie broker says the government funding announcement was potentially positive for Transurban and concerns about the airport rail link are "misplaced" with lost volume more than offset by population growth.

Ord Minnett last month labelled Transurban as a buy after the company announced the acquisition of the A25 toll road in Montreal Canada.

Macquarie has a $12.44 share price target on Transurban.

In the overall sector things have been tough for rail freight operator Aurizon Holdings Ltd (ASX: AZJ) whose share price has slipped 16% over the past 12 months, with airport operator Sydney Airport Holdings (ASX: SYD) also struggling to book gains.

Lesser known in the space is transport and logistics player K&S Corporation Ltd (ASX: KSC) who might be one to watch in the future as it begins to make ground steadily.

Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited. The Motley Fool Australia has recommended Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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