Auto Trader Group PLC (LON:AUTO) shares rose on Friday as Berenberg upgraded its rating saying that risks appear better understood and expectations are more reasonable.
German bank Berenberg upgraded the FTSE 250-listed firm to ‘hold’ from ‘sell’ and increased its price target to 365p from 350p.
READ: Auto Trader reports solid final results but predicts continued decline in car market
In a note to clients, analysts at Berenberg said many of the concerns on Auto Trader’s medium-term growth remains, notably with regards to the outlook for the used-car market and the impact from competition.
However, both consensus expectations and valuation multiples have reduced over recent months, and negative near-term stock trends are now at the base case.
The analysts said: “Where we have been positively surprised, however, is in Auto Trader’s ability to drive new product penetration (such as dealer finance) which could help to offset any near-term headwinds.”
“Risk appear better understood, and expectations are more reasonable,” the analysts said.
In morning trading, Auto Trader’s shares jumped 2.2% to 393.4p.