Sydney Airport Holdings Pty Ltd (ASX: SYD) released its February passenger data last week, with total passenger growth down 79.8% year-on-year compared to the 94.2% decline in January.
With increasing optimism for the travel industry, could investors expect a recovery for the Sydney Airport share price?
Goldman Sachs rates Sydney Airport share price a buy
Goldman Sachs is buy-rated on the Sydney Airport share price with a 12-month price target of $6.73 on 19 March. The broker notes that the sharp improvement in February was supported by easing border restrictions.
It believes that Sydney Airport remains in "effective hibernation" and expects it to "be a major beneficiary of the Australian domestic inoculation strategy if it facilitates relaxation of border restrictions".
Goldman forecasts a strong recovery in Sydney Airport earnings. The broker forecasts revenues of $950.0 million, $1,382.8 million and $1,521.0 million from FY21 to FY23. This compares to the reported 51% decline to $803.7 million in its FY20 results.
The earnings improvement should also see the return of dividends, with Goldman forecasting a dividend yield of 1.4%, 4.3% and 5.0% between FY21 to FY23.
What do other brokers think?
On 12 March, Citi took a more long-term view, believing that the Sydney Airport share price will get a major re-rate when international travel restarts.
Due to the uncertain nature of the COVID-19 vaccine rollout and when international borders will reopen, the broker retained a neutral stance with a $6.61 price target.
When could international travel restart?
In another research report from Goldman on 17 March, the broker's base case assumes international travel recovery starts mid-CY21 with the United States and the United Kingdom taking the lead.
Its report does acknowledge that opening programs across countries, progress on vaccinations and possible variant outbreaks to be key risk factors for the recovery.
The Sydney Airport share price is up 0.66% today, trading at $6.13 at the time of writing.
