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Investing.com -- JPMorgan analysts see a "bright future" for the global online classifieds sector, emphasizing that "selectivity will be key from here," in a note to clients on Friday.
The bank named Scout24 and Auto1 as top picks in Europe, alongside ATG and Vend. Conversely, Auto Trader and Rightmove (OTC:RTMVY) are their "least preferred."
JPMorgan’s reassessment of its coverage was based on "growth-adjusted valuation multiples and potential earnings upside," as well as an "in-depth analysis of the latest corporate actions concerning cost savings and margin potential."
They highlight that management teams are increasingly focused on "enhancing operational efficiency," a priority for investors alongside a strong revenue outlook.
The note also notes recent developments in Australia and the U.K., specifically mentioning CoStar’s strategic efforts to expand market share.
Furthermore, JPMorgan says that for potential M&A, “the stage looks set for consolidation in Europe and beyond.”
For the European market, JPMorgan states their top picks are "Scout24 (OW, AFL), Auto1, ATG, and Vend (formerly Schibsted; upgrading from N to OW)."
They maintain a "cautious stance on Auto Trader and Rightmove (both UW)." In Australia, the analysts recognize "clear winners (OW REA and SEEK)."
They also reiterate their "high-conviction call on U.S. peer, CoStar Group (NASDAQ:CSGP) (OW)."
JPMorgan initiated coverage on Baltic Classifieds Group with an Overweight rating and on Swedish property classifieds player, Hemnet, with a Neutral rating.