Getlink: A Strategic Buy Amid Temporary Traffic Dip, Betting on Long-Term Resilience

The May 2025 traffic figures for Getlink—a critical cross-Channel infrastructure operator—revealed a dip in both truck and passenger vehicle volumes. But beneath the surface, this decline appears to be a temporary blip, not a sign of structural weakness. For investors, this presents a compelling entry point to buy the stock near €16.30, as Getlink's long-term advantages in market dominance, diversification, and ESG alignment position it to thrive.

Decoding the May Traffic Decline: Calendar Noise, Not a Crisis

In May 2025, Getlink's truck shuttle traffic fell 4% year-on-year to 97,125 trucks, while passenger vehicle traffic dropped 1% to 195,294. However, these figures must be contextualized:

1. Seasonal Shifts: Analysts attribute the decline to calendar-driven factors. Easter 2025 fell earlier than in 2024, while UK school holidays in April 2025 redistributed travel demand away from May. Year-to-date (YTD) figures show resilience: truck traffic is down just 1% YTD, and passenger traffic is up 3%.
2. Market Share Strength: Despite the dip, Getlink retains a robust 36.4% market share in truck traffic and 62.1% in passenger vehicles. Its “smart border” system—streamlining customs and reducing congestion—has solidified its competitive edge.

Why the Decline Doesn't Signal a Structural Problem

The May data is a classic case of short-term noise overshadowing long-term trends. Getlink's financials and strategic moves underscore its durability:

1. Diversified Revenue Streams Mitigate Risk
- ElecLink Interconnector: This high-voltage electricity link, which resumed operations in February 2025, contributed €33 million in Q1 2025 revenue. With 83% of 2025 capacity already booked and plans for ElecLink 2, this asset could generate €125 million in annual revenue by 2026.
- Europorte Rail Freight: A low-carbon alternative to road transport, Europorte avoids 1.9 million tonnes of CO₂ annually. As EU emissions regulations tighten, this service aligns perfectly with ESG trends.

2. Strong Financial Buffers
- EBITDA margins of 51.8% and free cash flow (FCF) margins of 22% reflect Getlink's operational efficiency.
- A Debt/EBITDA ratio of 3.98x is manageable, especially after a recent €600 million green bond refinancing at lower rates.

Catalysts for Near-Term Recovery and Long-Term Growth

• June Traffic Data: Due July 7, this report could show a rebound as seasonal demand normalizes. A stronger June would alleviate investor concerns.
• Brexit Adaptation: The Channel Tunnel handles 25% of EU-UK trade, and Getlink's post-Brexit logistics upgrades (e.g., customs clearance systems) position it as an irreplaceable trade corridor.
• ESG and Regulatory Tailwinds: Europorte's CO₂ savings and ElecLink's green energy role align with EU climate goals, shielding Getlink from regulatory headwinds.

Risks to Monitor

• Economic Downturn: A prolonged European recession could suppress freight demand.
• Infrastructure Disruptions: Maintenance or accidents in the Channel Tunnel could temporarily disrupt traffic.

Investment Thesis: Accumulate Near €16.30, Target €18.37

The May dip has pushed Getlink's stock down to €16.30—a 12% discount to its 2024 peak. This creates an asymmetric opportunity:
- Upside Drivers: June traffic recovery, ElecLink's growing revenue, and Europorte's expansion.
- Downside Protection: Strong cash flows and a 3.98x Debt/EBITDA ratio limit vulnerability.

Analyst consensus targets an average of €18.37 over 12 months, with Morgan Stanley's bullish €20.40 call suggesting further upside.

Actionable Strategy:
- Buy: Accumulate shares near €16.30, with a stop-loss below €16.05.
- Hold: Until June traffic data confirms recovery, then consider scaling into the position.

Conclusion

Getlink's May traffic dip is a fleeting issue, not a harbinger of decline. With dominant market share, a diversified revenue model, and strategic bets on low-carbon logistics, the company is primed to capitalize on long-term trends. Investors who focus on the noise of temporary factors may miss a compelling entry point into this critical infrastructure asset. The stock's valuation discount and asymmetric risk-reward profile make it a standout buy for patient investors.