Broker tips: Auto Trader, Future

Analysts at Deutsche Bank lowered their target price on automotive classified advertising business Auto Trader from 800.0p to 720.0p on Thursday ahead of the group's full-year results on 26 May.

Deutsche Bank expects "a strong end to a transformative year" from Auto Trader, which it noted started 2022 "strongly", with better than expected full-year guidance that was again upgraded with its interim results.

The German bank, which reiterated its 'buy' rating on the stock, highlighted that this was when consumer engagement and customer numbers reached record levels, while product uptake "positively surprised" despite car supply challenges.

"We think the monetisation of new performance products continued driving strong ARPR growth in the second half of the year, and expect to hear more about Auto Trader's progress in monetising more of the online car buying journey," said the analysts.

However, DB stated that after it had run scenarios on Auto Trader's recent acquisition of Autorama, it saw fit to hit the stock with a 10% lower target price that it said offers around 30% upside.

Analysts at Berenberg slashed their target price on media company Future from 5,225.0p to 3,600.0p on Thursday, stating it was currently "a mispriced share".

Berenberg said despite modestly upgrading guidance at its interim results, Future's shares fell by roughly 6% on Wednesday.

While the analysts acknowledged that both weakening consumer sentiment and rising inflation present risks, they believe Future's results prove the growing value of its platform - which leaves it better positioned than peers to absorb these headwinds.

The German bank, which reiterated its 'buy' rating on the stock, continues to expect Future to at least deliver on full-year guidance in 2022 and also considers the shares to be "materially undervalued" on 11.7x P/E and a 9% FCF yield, almost 40% below its five-year average valuation.

However, Berenberg lowered its price target on the stock to reflect lower peer multiples and the removal of its upside scenario weighting given macro headwinds.

"Our new price target implies a FY 2022 P/E of 20x, in line with Future's five-year average multiple."

Reporting by Iain Gilbert at Sharecast.com