Berenberg upgrades Pendragon to 'buy'

While Berenberg acknowledged there were "clearly" macroeconomic headwinds facing UK car retailers such as Pendragon, it thinks such headwinds were "well understood by the market and priced in".

The German bank believes the bigger determinant of Pendragon's share price will be the progress it makes towards management's 2025 target of £85.0m-90.0m in pre-tax profits.

"We are increasingly confident about the achievability of such targets, which would leave Pendragon's current market capitalisation of £190.0m multiple times too low," said Berenberg, which transferred coverage to analyst Michael Benedict.

"As such, we believe the risk/reward trade-off is favourable; we upgrade the stock to 'buy' with a 25.0p price target."