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Investing.com - RBC Capital upgraded Bapcor Ltd (ASX:BAP) to Outperform from Sector Perform on Thursday, while simultaneously lowering its price target to AUD4.50 from AUD5.50.
The upgrade comes despite RBC acknowledging a challenging trading update from the automotive parts retailer that missed consensus earnings expectations and showed sales pressure across all business segments.
RBC Capital noted that Bapcor’s management has reaffirmed its commitment to strategic goals and is executing on cost reduction targets, even as the company undergoes a balance sheet review.
The investment firm expressed encouragement about operational improvements underway at Bapcor, despite acknowledging that the market may remain cautious given uncertain trading conditions and the company’s FY30 targets suggesting a structurally higher margin business when margins have actually been declining.
RBC justified its upgrade based on Bapcor’s undemanding valuation of 13x FY26E PE ratio, with the analyst’s revised earnings projections reflecting a more conservative growth profile for the company.
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