Broker tips: Auto Trader, Great Portland Estates, Relx
By Iain Gilbert
Date: Friday 08 Nov 2024
(Sharecast News) - Analysts at Berenberg lowered their target price on Auto Trader from 880.0p to 830.0p on Friday, stating the group's "noisy" H1 had raised questions.
Auto Trader reported its H125 results on 7 November, with shares ending the session down 7% as a result. While management reiterated its FY25 outlook, Berenberg noted that the shape of delivery has changed, with consensus forecasts for average revenue per retailer likely to come down and for retailer forecourts likely to go up, with those factors expected to offset each other.
In the German bank's view, yesterday's share price move reflected some scepticism about the company's ability to re-accelerate ARPR growth to deliver FY26 consensus forecasts.
Berenberg, which has a 'hold' rating on the stock, added that Auto Trader shares were currently trading on a 24.0x FY25 price-to-earnings ratio.
Citi upgraded its stance on Great Portland Estates on Friday to 'buy' as it said it was the most attractive time to buy in the last decade.
The bank said the bifurcation of the West End office market is likely to intensify demand for prime core West End office space as tenants increasingly trade up the quality curve.
"This is likely to overwhelm prime development supply aiding development opportunity more than rental growth.
"This increasingly plays into GPE's cyclical timing and development strategy where the stock price is underestimating the scale and profitability of the repositioning opportunity relative to GPE's size."
It also noted the stock is trading at levels below the value of low grade West End offices and comparable to troughs of 2009, undervaluing GPE's portfolio, platform and opportunity, with potential for a cyclical recovery.
JPMorgan Cazenove lifted its price target on Relx on Friday to 4,550p from 4,200p to reflect an acceleration in the Legal and STM (scientific, technical & medical) divisions driven by generative AI.
JPM maintained its 'overweight' rating on the shares, which are also on its 'Analyst Focus List', and said the new price target would imply a 2025 price-to-earnings multiple of 35x (versus circa 28x today), which is a slight premium to the broader US peer group trading on 34x, which includes more cyclical credit bureaus and rating agencies. However, it's a discount to Relx's closest US peers of Thomson Reuters (circa 41x) and Verisk (39x) despite Relx offering similar growth.
"We believe that the sale of exhibitions on a 3-5 year view could unlock a further re-rating," JPM said..
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