Shore Capital upgrades Auto Trader to 'buy'

The broker said Auto Trader’s FY23 results detailed a strong performance and, notwithstanding macro headwinds, "included an encouraging assessment of the outlook for the current year".

"We have updated our financial model and, despite the drag on profitability being exerted by Autorama, forecast attractive EPS growth, a useful DPS progression and strong cash generation (fuelling further share buy-backs)," it said.

"We believe the group’s stock valuation looks undemanding relative to this potential and its fundamental attractions following a period of muted share price performance (our fair value estimate of 714p suggests 17% upside potential) so are upgrading our recommendation from hold to buy."