According to UBS, Eagers Automotive delivered a strong trading update. Key drivers were considered to include supply constraints resulting in lower domestic inventory levels and continued execution of cost-out initiatives.
The broker expects momentum to improve through fourth quarter 2020 underpinned by order book growth flowing through to deliveries and fiscal policies becoming more supportive. Additionally, the analyst expects pent-up demand in a (potentially) normalising Victorian market.
UBS lifts EPS forecasts for FY20, FY21 and FY22 by 43%, 39% and 17%, respectively.
The Buy rating is unchanged and the target price is increased to $13 from $10.
Sector: Retailing.
Target price is $13.00.Current Price is $11.88. Difference: $1.12 – (brackets indicate current price is over target). If APE meets the UBS target it will return approximately 9% (excluding dividends, fees and charges – negative figures indicate an expected loss).
