Brokers keep Auto Trader on 'hold' despite strong first half

Auto Trader's share price raced ahead on Thursday morning after the automotive online marketplace smashed expectations with its interim results; but that wasn't enough to change analysts' neutral ratings on the stock.

Both Peel Hunt and Shore Capital kept their 'hold' stances on the shares following the results.

First-half revenues jumped 12% year-on-year to £281m, well ahead of the £259m expected by the market, while earnings per share rose 2% to 14p, ahead of the 13.8p expected.

Peel Hunt called the performance "robust", highlighting a particularly strong performance of its core business, with trade revenue up 9% and average revenue per retailer rising 12%.

The broker said it expects to upgrade its full-year EPS forecasts by 4-5% on the back of the results, saying that while the macro environment remains tough, "Auto Trader continues to sail through".

However, with the shares trading at 23 times full-year earnings forecasts, Peel Hunt chose to stay at 'hold'.

Shore Capital, meanwhile, said the results "reinforce our view that Auto Trader is a well managed company with a robust business model and a strong commercial and consumer proposition".

However, current forecasts indicate a value of 646p for the shares, "suggesting that the group’s share price, which is little changed over a six-month view, remains in fair value territory".

The stock was up 7.3% at 681.6p by 1054 GMT.