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Investing.com - Canaccord Genuity downgraded Bapcor Ltd. (ASX:BAP) from Buy to Hold on Monday, while maintaining a price target of AUD4.15.
The research firm cited valuation concerns as the primary reason for the downgrade, noting that the stock price has approached their target level, limiting further upside potential in the near term.
Canaccord’s AUD4.15 price target is based on a blended valuation approach, combining discounted cash flow (DCF), price-to-earnings ratio (PER), and sum-of-the-parts (SOTP) methodologies.
The firm’s analysis yielded specific valuations of AUD4.23 from their DCF model using an 8.9% weighted average cost of capital and 2.5% terminal growth rate, AUD4.35 from their SOTP calculation based on EV/EBITDA divisional multiples, and AUD3.87 from their PER valuation using 16.2x FY26E earnings.
While Canaccord acknowledged that Bapcor is not expensive relative to its historical valuation, the firm believes investors need to see "a more definitive payoff path for its turnaround" before the stock can command a higher multiple.
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