Auto Trader Group PLC (LSE:AUTO) shares are 3.6% cheaper today after investment bank JP Morgan downgraded the online car seller to underweight from neutral.
Easing momentum in the core business, a lack of financial bearing from digital retailing initiatives, paired with an unattractive valuation were behind the move, the investment bank said, leaving shares near the top of the FTSE 100 fallers list.
JPM thinks retailer revenue momentum will likely slow, putting downside risk to consensus estimates for flat forecourts, while it expects upselling and ad-on products to evolve at a slower pace.
The broker pointed out the shares have now closed the valuation gap to peers and on 14.0x EV/Ebitda for 2025 it sees the valuation as unattractive.
JPM’s forecasts are 5% and 7% below consensus for 2025 and 2026 respectively and its sees better value elsewhere.
Alongside the rating downgrade, JPM lowered its share price target to 555p from 630p before.