Broker tips: Auto Trader, Ceres Power

by | Jul 25, 2023

(Sharecast News) – JPMorgan Cazenove downgraded Auto Trader on Tuesday to ‘underweight’ from ‘neutral’ and cut the price target to 555p from 630p as it pointed to easing momentum in the core business and an unattractive valuation.
The bank argued that Retailer revenue momentum will likely slow, putting downside risk to consensus estimates for flat forecourts, and said it expects upselling and ad-on products to evolve at a slower pace.

It also said that stress testing new Digital Retailing initiatives – Deal Builder/Autorama – it concludes meaningful scale (at least +20% uplift to group profits) would require “rather stretched” assumptions.

JPM also pointed out the shares have now closed the valuation gap to peers and said the relative valuation is unattractive.

“With our estimates 5% and 7% below consensus on FY25/26E adjusted EPS and lack of catalysts, we see (far) better value elsewhere in Classifieds,” it said. JPM favours overweight rated Scout24 and Adevinta.

Analysts at Berenberg stood by their ‘buy’ recommendation for shares of Ceres Power following the company’s first half results.

Those, they said, confirmed the fuel cell and electrolyser manufacturer’s progress over that time period, while cash burn had been as guided to.

Nevertheless, as the company had cautioned, the fact that the signing of its two joint ventures in China was now expected to occur later in 2023, then the associated revenues were only likely to be recognised in 2024.

Hence, Berenberg’s move to trim its target price from 1,155p to 1,140p.

“The update on timing of the JVs is likely to frustrate the market, in our view, but we are encouraged that [Bosch and Weichai] remain committed to getting it over the line before year-end.

“We reiterate our Buy rating with Ceres continuing to offer a genuinely differentiated product, business model and portfolio of blue-chip partners.”

Related articles

RBC Capital cuts Rentokil price target

RBC Capital cuts Rentokil price target

(Sharecast News) - RBC Capital Markets cut its price target on Rentokil Initial on Wednesday to 575p from 610p as it downgraded forecasts for forex and a greater back-end loading of TMX synergies, but said it believes the long-term story remains intact. The bank said...

Trending stories

Join our mailing list

Subscribe to our mailing list to receive regular updates!

x