Wachovia Downgrades Macquarie Infrastructure Co. (MIC) to Market Perform

August 8, 2008 9:02 AM EDT

Wachovia downgrades Macquarie Infrastructure Co. (NYSE: MIC) from Outperform to Market Perform with a $24 to $26 valuation range.

The downgrade is based on "1) greater than expected softness at Airport Services, and 2) adjusted capital spending plans vs. previous expectations, leaving us with less conviction in our valuation estimates for Airport Services and Bulk Storage. Though Airport Services results in Q2 were below expectations, its performance in isolation would be unlikely to take us off of our previous (recent) upgrade recommendation. Yet, MIC also increased (2nd time in '08) the expected maintenance cap-ex spend at IMTT (mgt contends spending will come down in '09), and we believe the rate of return on incremental growth cap-ex at Airport Services is below our prior expectations."

Wachovia believes that the price decline after yesterday's earnings release was overdone. However, they only see few catalysts to spur outperformance in the near-term.

Macquarie Infrastructure Company LLC owns, operates, and invests in a diversified group of infrastructure businesses, which provide basic, everyday services in the United States.

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