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.

For Transurban Group, the analyst forecasts FY23 proportional earnings (EBITDA) of $2,534m, a rise of 33% on the previous corresponding period.

Morgan Stanley retains its Equal-weight rating and $14.88 target.

Sector: Transportation.

Target price is $14.88.Current Price is $13.93. Difference: $0.95 - (brackets indicate current price is over target). If TCL meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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