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Liberum raises target price on \'unchallenged\' Autotrader

By Iain Gilbert

Date: Tuesday 09 Jul 2019

Liberum raises target price on \'unchallenged\' Autotrader

(Sharecast News) - Analysts at Liberum raised their target price on classifieds advertiser AutoTrader from 620p to 640p on Tuesday, stating the company had gone from \"strength to strength\" of late.
Liberum said AutoTrader\'s dominance in the UK used car classifieds market was \"unchallenged and unlikely to change\", with new revenue streams set to come on tap, which should drive growth in average revenue per retailer, and unchanged used car market dynamics in the UK.

The broker expected AutoTrader\'s ARPR growth would be \"at the 9-10% level\" in coming years, as both new products and increased take-up of premium services drive growth, with basic price increases limited.

\"Auto\'s share of minutes is x5 of the next player, Gumtree. Structurally, as the leader in the market, it benefits from strong virtuous circle effects and very high barriers to entry,\" said Liberum.

Liberum also noted that regulatory-wise, a recently announced Competition and Markets Authority investigation \"should not cause major issues\" for AutoTrader, at least in the short-to-medium-term, and may actually help the group.

\"TP goes up to 640p from 620p and is based on a DCF. The shares are expensive optically at 24.5x but the old adage of paying for quality is appropriate here,\" concluded Liberum, which also reiterated its \'buy\' rating for the group\'s shares.

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