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Investing.com - Morgan Stanley (NYSE:MS) upgraded Peter Warren Automotive Holdings Ltd (ASX:PWR) from Equalweight to Overweight on Friday, raising its price target to AUD2.30 from AUD1.40.
The upgrade follows the automotive retailer’s implementation of several self-help initiatives across all aspects of its business, which Morgan Stanley believes are strengthening the company’s foundation.
In new vehicles, Peter Warren has shifted its mix toward consumer preferences, which serves as a sales and incremental margin tailwind. The company has also improved inventory control, reducing costs and discounting, with these metrics now specifically included in key staff incentives.
The used vehicle business shows improvement with the ratio of used to new vehicles sold increasing to 0.31 in FY25 from 0.26 in FY23/24, though still below the FY20 level of 0.36. Service operations have demonstrated consistently strong growth with improving attach rates, while finance and insurance growth has outpaced new and used vehicle volume growth.
Morgan Stanley notes that Peter Warren has implemented better operational expense control with likely more efficiency improvements to come, and is better positioned for capital deployment going forward.
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