Auto Trader PLC (LON:AUTO) has been downgraded to ‘neutral’ from ‘buy’ by analysts at UBS on valuation grounds after a strong year for the shares.
In a note, the Swiss bank said following an increase in the share price of around 53% in the last 12 months, it believed the market was now pricing in a compound annual growth rate (CAGR) for Auto Trader’s revenues of 9% between 2019 and 2026.
READ: Auto Trader shares motor as it ups full-year revenue guidance after strong first half
While UBS said this figure was “achievable” from the FTSE 250 online car showroom, analysts saw “limited” further upside to the shares in the next 12 months unless the company either captured the £250mln opportunity from its transition to a transaction platform, although there was limited visibility on this, or saw a Brexit deal provide a boost to the value of the pound.
UBS also upped its target price for the group to 530p from 510p to reflect share price rise.
In mid-morning trading on Tuesday, Auto Trader shares were up 1% at 534.6p, just a touch above UBS’s new target price.