Shares in Auto Trader Group PLC (LSE:AUTO), the UK's largest online car marketplace, were down 4% after Panmure Liberum downgraded the stock from 'buy' to 'hold' and cut its target price from 830p to 420p.
It reckons that the fallout from the company's controversial Deal Builder product rollout has been worse than expected.
The broker now forecasts underlying top-line growth of just 1% in the current financial year, with the absence of Deal Builder as a near-term revenue driver leaving a gap in the company's growth story.
Auto Trader's full-year results to March 2026 came in 3-4% behind Panmure Liberum's estimates on most measures, with revenue of £624.3 million and EBIT of £415.3 million.
The Deal Builder rollout last autumn triggered a significant dealer backlash, with 460 retailers leaving the platform at peak and further package downgrades on top.
Trough dealer numbers fell to around 13,500. Auto Trader is running free stock offers to tempt some back, but the results will not be clear until June.
Panmure Liberum says Deal Builder was intended to be a core growth driver over the next several years, with plans to extend it into finance and part-exchange. That now looks like a much longer-term project, and the broker questions what will drive growth in the interim.
The company managed to execute a 5.5% pricing round, but departing dealers have been accompanied by significant volume downgrades, creating a further headwind to average revenue per retailer.
Panmure Liberum says while the online classifieds subsector remains undervalued, it would prefer Rightmove as a way to play that theme given Auto Trader's near-zero underlying revenue momentum.
Auto Trader shares last traded at 435p.