LONDON (ShareCast) - (Sharecast News) - There are not many opportunities visible to lift the Auto Trader share price in the short term, said UBS on Tuesday.
The Swiss bank downgraded its recommendation on the company to 'neutral' from 'buy' following roughly a 30% rerating since full year results in June, though lifted its price target by 20p to 445p.

Data from the UBS Evidence Lab indicates trade used car listings have recovered from the 5% year-on-year decline in April to flat in August, and therefore should only impact average revenue by -2% in the first half of the year, with the Evidence Lab also finding car dealers are continuing use of Auto Trader following recent price rises.

The second half could be hit if the Worldwide Harmonised Light Vehicle Test Procedure protocol in September affects UK new car sales in the next few months.

Taking everything into account, UBS's growth forecasts for the current and 2020 fiscal years appear "secure", given existing product pipeline and recovery in stock levels and there is seen to be a B2B opportunity from the Dealer Auction joint venture with Manheim, as well as potential upside from any new product announcements.

For example, analysts estimate a "buy it now" product where consumers could place a deposit on advertised cars, could increase Auto Trader ARPR by up to 24% once fully penetrated.

"However, with limited visibility on adjacent opportunities (e.g., transactions, new cars, financial brokerage, and insurance), we see limited catalysts short term."

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