Auto Trader Group PLC (LON:AUTO) was upgraded to ‘buy’ from ‘hold’ by Liberum as the broker sees a bright outlook for the online retail market for cars.

Analysts raised the target price to 660p from 515p after the half-year numbers topped their expectations, putting the FTSE 100-listed group in a better position to drive post-pandemic revenue growth.

READ: Auto Trader returns to free advertising as UK lockdowns return

COVID-19 has accelerated the shift to online transitions for cars as well, with retailers having to seek a different short-term approach for closures, which is potentially translating into a long-term change.

The broker lowered the estimates for the year to March 2021, with revenue expected to come in at £264mln and underlying earnings (EBITDA) of £163mln.

They are expected to rise to £371mln and £267mln respectively in the following financial year.

“Site traffic is strong, indicating pent-up demand and potential longer-term shifts away from public transport – which will benefit the group in the short and longer term as the group shifts to facilitating online transactions,” analysts noted.

“As we enter a new lockdown and forecourts again close, the uncertainties around logistics have been ironed out and we see retailers better positioned to operate without physical forecourts via Auto Trader.”

Shares dipped 1% to 564.8p on Wednesday morning.

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