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On Wednesday, Canaccord Genuity adjusted its stance on Eagers Automotive Ltd (APE:AU), shifting the stock rating from ’Buy’ to ’Hold’. The change in rating is accompanied by a slight increase in the price target, now set at AUD17.20, up from the previous AUD17.00.
Andrew Hodge, an analyst at Canaccord Genuity, cited a combination of external factors influencing the decision. These include the proximity of Easter to Anzac Day, which may extend holiday periods, the uncertainty surrounding the upcoming Federal election, and the impact of shutdowns in Southeast Queensland due to Tropical Cyclone Alfred. Hodge believes these variables could potentially distort earnings, with a greater impact expected in the second half of 2025 or a dampened first half, depending on perspective.
The new forecasts for the fiscal year 2025 have been adjusted to account for these factors, introducing a greater skew than initially anticipated. Hodge’s commentary reflects an expectation that earnings may not be as evenly distributed throughout the year as previously thought.
Moreover, the downgrade comes after a period of notable share price appreciation for Eagers Automotive. The stock’s recent strong performance has resulted in its market value surpassing Canaccord’s target price, prompting the firm to revise its rating based on valuation grounds.
Canaccord Genuity’s updated assessment reflects a cautious approach towards Eagers Automotive’s stock, considering the current market conditions and the potential for uneven earnings distribution in the upcoming year. The new ’Hold’ rating suggests that the firm advises investors to maintain their current position on the stock without further buying activity at this time.
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