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Investing.com - JPMorgan has downgraded Eagers Automotive Ltd (ASX:APE) from Overweight to Neutral while raising its price target to AUD22.80 from AUD19.60.
The downgrade comes despite JPMorgan noting that Eagers Automotive’s revenue target of more than AUD13 billion implies Bloomberg consensus estimates will need to increase by at least 5% compared to prior expectations.
The firm cited improving industry dynamics and a lower interest rate environment that are likely to support volume growth and profitability through fiscal year 2025 for the company.
JPMorgan identified additional growth verticals for Eagers Automotive, including strategic alliances, EA123, and further dealership acquisitions that could benefit the company.
Despite these positive factors, JPMorgan justified its downgrade by pointing to full valuation at approximately 25x price-to-earnings ratio, with its upwardly revised target price remaining below the current share price.
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