Berenberg cuts AutoTrader target price, cites lack of near-term catalysts

(Sharecast News) - Berenberg has cut its target price for new and used car sales platform company AutoTrader, saying that the stock is cheap but lacking any near-term catalysts to take the shares higher. Berenberg kept its 'hold' rating on the stock, lowering its target from 580p to 510p.

The broker said it cut profits forecasts by around 4% after FY26 results from AutoTrader came in below expectations last week, driven by lower assumptions on stock and forecourt numbers, putting its numbers at the low end of the company's guidance range.

Issues with the rollout of AutoTrader's Deal Builder platform, designed to improve buyer intelligence and help retailers convert more deals, resulted in higher-than-normal churn in the company's dealer base, with retailer numbers falling by 4% in the second half ended 31 March. While the company has noted recent improvements in retail numbers, it guided to a further 1-2% decline in the dealer base in FY27.

Meanwhile, average revenue per retailer for FY26 was also below forecasts, partly due to retailers withholding a greater proportion of stock on the platform, Berenberg said.

"While the company's £300m incremental buyback being above our prior forecast and its valuation are supportive, improving dealer profitability and a recovery in forecourts are more important for sentiment, and we do not see any near-term catalysts for a re-rating," the broker said.

The shares were down 4.1% at 435.90p by 1015 BST.