Peel Hunt upgrades Auto Trader to 'buy'
Peel Hunt upgraded Auto Trader to ‘buy’ from ‘add’ with an unchanged price target of 445p, which signals around 25% upside from current levels.
AUTO TRADER GR
£7.95
17:35 15/11/24
The brokerage said the market should not be cynical about the fact private equity firm Apax Partners has sold nearly all of its stake in the company.
“The ‘heavy lifting’ was done under Apax ownership, leading to today’s pure, digital AUTO success story. Hence, in this case, the market should not be cynical about a PE exit,” it said.
In addition, Peel noted that many listed UK car dealers such as Vertu and Cambria – who are staple clients of Auto Trader – have put out buoyant updates in recent weeks.
It said the used car market in particular was benefiting from the lagged impact of strong new car registrations, adding that Auto Trader is well placed in this market.
“In our view, with a growing PLC track record, and scope for improved cash returns, AUTO is the most attractive of the UK-quoted large cap names,” Peel said.
At 1550 GMT, shares were up 2.5% to 378.10p.