Sub-Title: Bank of America’s Underperform Call on Mexico’s Airport Leader Signals Shifting Sentiment Despite Resilient Fundamentals

Investors in Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (PAC), Mexico’s preeminent airport operator, awoke to a notable shift in sentiment after BofA Securities issued a downgrade from “Neutral” to “Underperform” on June 12, 2025. This move, from one of Wall Street’s most influential analyst teams, raises critical questions about the sustainability of PAC’s recent rally and the risk-reward balance for investors at current levels. With no price target provided in the downgrade, the market is left to interpret the signal using a mosaic of recent financial results, stock price momentum, and the company’s evolving capital strategy.

PAC, which operates a diverse portfolio of airports across Mexico and Jamaica, sits at the nexus of Latin American travel recovery, infrastructure investment, and regulatory shifts. Analyst rating changes of this magnitude warrant close scrutiny: they often precede broader institutional repositioning and can foreshadow changing sector tides.

Key Takeaways:

• BofA Securities downgrades PAC to Underperform, signaling increased caution despite lack of explicit price target.

• Stock trades at $235.00, just off its all-time high ($241.62, June 11), after a multi-month uptrend.

• Recent news highlights regulatory approvals for Jamaican airport tariffs and investment programs, and steady 2.6% YoY passenger growth in May 2025.

• Technical momentum remains robust (recent RSI ~60), but valuation and macro risk may be factors in analyst caution.

• Investor attention should turn to sustainability of growth, regulatory headwinds, and potential for mean reversion after a 60%+ one-year rally.

Wall Street’s Warning: The Analyst Downgrade in Context

BofA Securities Steps Back: What This Means

Bank of America Securities, a heavyweight in global equity research and Latin American infrastructure coverage, downgraded PAC to Underperform from Neutral. As a top-tier research house with a deep bench in emerging market transport and infrastructure, BofA’s call carries significant weight. Their shift comes as PAC’s stock price hovers near all-time highs following a year of exceptional returns (from a 52-week low of $146.62 to a peak of $241.62—a rally of more than 60%).

Though BofA did not publish a new price target, the Underperform rating is a clear caution flag. Historically, such a call often reflects a combination of valuation concerns, slowing underlying growth, and/or emerging sector risks that may not yet be reflected in consensus forecasts or the share price. In this case, it’s likely a blend of all three.

Analyst Confidence & Reputation

BofA’s equity research division is renowned for its data-driven, macro-aware approach in Latin America. Their calls are closely followed by institutional investors, and a shift to Underperform tends to prompt portfolio rebalancing among global funds. The timing—immediately after PAC hit new highs—suggests a deliberate signal that the market may not be adequately discounting forward risk. The alignment with recent price performance and sector dynamics underscores the seriousness of the downgrade from a research powerhouse.

Dissecting the Fundamentals: Growth Versus Valuation

Financial and Operational Momentum

PAC operates key airports in both Mexico and Jamaica, benefiting from post-pandemic travel normalization and ongoing infrastructure investments. Recent headlines highlight:

• Approval of maximum tariffs and capital development programs (2026-2030) for both Montego Bay and Kingston airports in Jamaica, securing long-term revenue visibility and regulatory clarity.

• Passenger traffic growth of 2.6% YoY in May 2025, reflecting both resilience in leisure travel and potential for incremental margin gains as volumes recover.

While these news items underscore operational strength, they also set a high bar for future performance—especially with the stock now priced for perfection.

Recent Stock Performance: A Rally That Demands Justification

PAC shares have been on a tear:

• Current Price: $235.00

• 52-Week Range: $146.62 (Aug 2024) – $241.62 (June 2025)

• One-Year Return: Over 60%

• Recent RSI: ~60 (borderline overbought)

• Technical Support: 20-day EMA: $229.67; 20-day SMA: $231.01

Momentum is evident, but so is the risk of mean reversion, especially as trading volumes have normalized and technical oscillators approach stretched levels.

Valuation and Market Sentiment

With no explicit price target from BofA, we infer their caution is rooted in stretched valuation multiples relative to historical averages and regional peers. The market’s pricing-in of regulatory wins and traffic growth may leave little room for error if macro headwinds (currency volatility, inflation, or regulatory tightening) materialize in the second half of 2025.

Regulatory Tailwinds and Sector Headwinds

Jamaica Approvals: A Double-Edged Sword?

On June 6, PAC announced completion of regulatory reviews for both Montego Bay and Kingston airports, securing maximum tariff frameworks and mandated capital investments for 2026-2030. This news was well-received, as it locks in fee structures and gives investors confidence in multi-year cash flows.

However, some analysts may see the regulatory clarity as a “sell the news” moment, especially if future upside now depends on flawless execution or unexpected passenger growth. The incremental traffic growth (+2.6% YoY in May) is healthy but not spectacular relative to the stock’s recent re-rating.

“The conclusion of the ordinary review process for maximum tariffs per passenger and committed investments... secures the capital development program of Montego Bay for 2026–2030.”
— GlobeNewsWire, June 6, 2025

Macro Risks on the Radar

Investors need to remain vigilant for broader risks:

• Peso volatility (PAC’s ADRs are dollar-denominated, but underlying cash flows are in MXN and JMD)

• Potential for slower-than-expected travel growth if economic headwinds persist in North America or the Caribbean

• Regulatory risk, as governments globally revisit airport fee structures post-pandemic

Technicals, Trading, and Market Structure

Recent Trading Patterns

• Average Daily Volume: 75,269 shares

• Highest Volume (last year): 334,718 shares (November 26, 2024)

• Volatility: ~5.4% (average daily)

Liquidity has remained healthy, but the lowest daily volume (just 3 shares) on June 12, 2025, suggests some early waning of speculative interest as the stock consolidates near highs.

Sentiment and Mean Reversion

• Sentiment Ratio: 0.50 (nearly even split between up and down days over the past year)

• VWAP (last year): $186.30 (compared to $235 now)

PAC is now trading well above its average price over the past year, further supporting the idea that upside is less compelling while downside risk grows should sentiment shift.

What Should Investors Watch Next?

• Earnings Guidance (Q2 2025): Will management revise passenger or revenue forecasts upward, or will comps get tougher?

• Mexico and Jamaica Macroeconomics: Currency, inflation, and tourism flows will be closely watched.

• Peer Performance: Are other Latin American airport operators seeing similar caution from research analysts?

• Market Reaction to Downgrade: Will the stock pause or reverse after this high-profile call, or will bulls buy the dip as in previous quarters?

Conclusion: A Call for Caution Amid Outperformance

BofA Securities’ downgrade of PAC is a timely reminder that even best-in-class operators can face valuation ceilings after long bull runs. The company’s operational momentum and regulatory wins are impressive, but the market’s expectations now demand flawless execution and sustained growth. With shares trading near record highs and no explicit upside target from the analyst, risk/reward has shifted—at least in the eyes of one of Wall Street’s most respected research desks.

Investors should revisit their thesis, weighing the prospect of continued air travel recovery and infrastructure investment against the risk of mean reversion, regulatory shifts, and potential macro shocks. For now, the runway looks well-lit—but turbulence may be ahead.