Morgan Stanley anticipates a modest positive reaction to the June-quarter traffic and revenue update by Atlas Arteria.

The traffic for the APPR and Chicago Skyway were beats of 1% and 2%, respectively, against the broker's forecasts, while Dulles Greenway was a -4% miss.

Equal-weight rating and $6.88 target unchanged. Industry View: Cautious.

Separately, Morgan Stanley reviews stocks under its coverage in the Australia Infrastructure sector prior to the upcoming August reporting season. The order of preference is Atlas Arteria, Transurban Group and  Aurizon holdings.

Within the more cyclical freight and logistics category, the broker prefers Atlas Arteria over Transurban on an undemanding risk-adjusted valuation, and organic free cash flow growth prospects. Aurizon Holdings is least preferred.

Sector: Transportation.

Target price is $6.88.Current Price is $6.21. Difference: $0.67 - (brackets indicate current price is over target). If ALX meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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