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Auto Trader downgraded to ‘hold’ by Liberum but upgraded to ‘add’ by Peel Hunt on recovery outlook

Analysts at Liberum see a “murky” outlook while those at Peel Hunt are encouraged by post-lockdown trading

Auto Trader Group plc - Auto Trader downgraded to ‘hold’ by Liberum but upgraded to ‘add’ by Peel Hunt over recovery outlook

Auto Trader Group plc (LON:AUTO) has been downgraded to ‘hold’ by Liberum Capital, but upgraded to ‘add’ by Peel Hunt, with both brokers previously having ‘buy’ recommendations on the stock.

The analysts at Liberum said they see a “murky” outlook for the current financial year, with car retailers already dropping out of the market, and have chopped their target price for Auto Trader to 515p from 640p.

READ: Auto Trader downgraded to ‘neutral’ by UBS over slow transition to transaction platform

“We endorse Auto Trader’s strategy to help retailers with free advertising in April and May, but believe given a likely economic downturn, squeezed customer margins and fewer retailers will provide headwinds for growth,” they commented in a note to clients.

The car selling website is still offering a 25% discount on July advertising, after allowing retailers to advertise for free in June.

In contrast, the analysts at Peel Hunt raised their target price for Auto Trader to 560p from 545p as they think the initial shape of post-lockdown trading is “encouraging”, specifically end-consumer demand levels.

With clearer trading conditions, the Peel Hunt analysts see prospects for the group's recent fundraise to be used for strategic purposes, including new acquisitions, rather than defensive ends.

Auto Trader shares dipped 1% to 517.4p on Thursday morning.

Quick facts: Auto Trader Group plc

Price: 573.6 GBX

LSE:AUTO
Market: LSE
Market Cap: £5.54 billion
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