Broker tips: FRP Advisory, AutoTrader
By Iain Gilbert
Date: Friday 17 May 2024
(Sharecast News) - Analysts at Berenberg raised their target price on liquidators FRP Advisory from 175.0p to 200.0p on Friday, stating the group's FY24 update delivered "sizeable upgrades".
Berenberg said FRP's FY24 trading update for the year to April was, in short, "highly impressive", with management now expecting to report revenues of £128.0m, up 23% year-on-year, and adjusted underlying earnings of £37.0m, up 37% year-on-year, representing a 28.9% margin.
"Having last heard from management on trading back in November 2023, today's update reflects continued strong performance across all service lines over H224, as well as the unwind of management conservatism," said the German bank, which reiterated its 'buy' rating on the stock.
"Since its IPO in 2020, FRP's EBITDA has increased by an 18% CAGR, and in the context of a current valuation of 12x FY25 P/E (on new forecasts), shares look attractive."
Morgan Stanley downgraded Auto Trader on Friday 'underweight' from 'equalweight' and cut its price target on the stock to 600.0p from 625.0p.
We see a mismatch between relative share strength and near-term Deal Builder growth, combined with relaxed sentiment around Google's entry into the UK," it said.
Morgan Stanley said it sees market/consensus expectations as skewing optimistic on near-term Deal Builder monetisation, while the market seems much more relaxed above the competitive threat from Google in cars than that from CoStar in real estate.
"As a result, AUTO now trades at a premium to Rightmove, which we do not see as warranted given similar revenue/EPS growth trends," it said. "There is no change in our overall view of Auto Trader as a business, arguably the best-in-class car vertical operator in Europe. There is a long-term bull argument to be made around Deal Builder, but timing is not right yet, in our view."
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