Transurban Group (ASX: TCL) shares are slipping today.
Shares in the S&P/ASX 200 Index (ASX: XJO) toll road developer and operator closed yesterday trading for $14.24. In afternoon trade on Tuesday, shares are swapping hands for $14.21 apiece, down 0.2%.
That sees the ASX 200 stock up 15.1% over 12 months, handily outpacing the 6.0% one-year gains posted by the benchmark index.
And that's not including the 64 cents a share in unfranked dividends Transurban paid out over the full year. At the current price, Transurban shares trade on a trailing dividend yield of 4.5%.
Of course, those returns have all come and gone now.
Looking ahead, is Transurban stock one to buy, hold, or sell today?
Here's what the analysts at Macquarie Group Ltd (ASX: MQG) recommend.
What's the outlook for Transurban shares?
On 8 May, Transurban shares closed up 1.7% following a business update.
Looking to streamline its operations and reduce costs, the company said it would cut 300 jobs from its workforce.
"We must be a more agile and efficient organisation and re-allocate our capital and resources in ways that best serve our stakeholders," Transurban CEO Michelle Jablko said of the "regrettable" job reductions.
The company estimated cost savings at more than $50 million per year. It said the streamlining of its operations would not impact its FY 2025 dividend guidance of 65 cents per share, or its underlying full-year cost growth guidance
In a research report released on Monday, Macquarie noted:
TCL's material workforce restructuring is necessary. The savings of ~ $50m pa are needed to mitigate the drag caused by WGT [Westgate Tunnel] opening in 2H26. EBITDA [earnings before interest, taxes, depreciation and amortisation] will be below the cash finance costs of ~$170m, thus the savings should ensure TCL is nearly cashflow neutral.
Macquarie also cautioned that road works in various regions where the company operates are likely to impact revenue and earnings, which could pressure Transurban shares.
"Road works across the group, we estimate, has become a cumulative drag on revenue of ~$105-135m pa and ~$90-120m to EBITDA and cashflow," the analysts noted.
Adding the dots, Macquarie maintained its hold (neutral) rating on Transurban shares.
According to the broker:
TCL remains a high-quality defensive. Fundamentals of population growth remain in TCL corridors, albeit traffic growth is dampened near-term by roadworks and tail of softer economy. Benefit of NSW openings is still 2-3 years away, albeit cost performance could provide some dividend upside.
Macquarie raised its price target for Transurban to $13.70 a share, from the prior $12.82 a share.
