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Investing.com - BMO Capital upgraded AutoCanada (TSX:ACQ) (OTC:AOCIF) from Market Perform to Outperform and doubled its price target to C$40.00 from C$20.00.
The upgrade follows two quarters of improved results that provided BMO Capital with better visibility on AutoCanada’s execution of its cost-reduction plan.
BMO Capital expects further growth potential from increased sales volume on the company’s improved cost structure and the eventual resumption of merger and acquisition activities.
The firm’s new C$40 price target assumes a 6.5x multiple on BMO’s revised 2026 EBITDA estimates, compared to AutoCanada’s historical range of 6-8x.
BMO Capital noted that despite recent stock price gains, AutoCanada’s valuation "still appears reasonable" and its analysis does not assume peak cycle volumes or gross profit per unit.
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