Autotrader Group PLC has been labeled as the "automotive Kingmaker" within the United Kingdom by Jefferies, a US investment bank, however the bank does think the company's shares are currently priced correctly.
In their first note on the FTSE 100 car sales platform, analysts cited “many enviable traits” such as Auto Trader’s growth, margin expansion, “exceptional cash flow generation” and low leverage.
They also praised the company’s switch to online, having made its name as a magazine which was first published back in the seventies.
“Auto Trader's reinvention as a digital business saw it harness its 40-year roots in used cars to the rapidly evolving sensibilities of car buyers (chiefly, using the internet to erode the information asymmetry car retailers used to habitually exploit),” read a note to clients.
“Auto Trader's pre-eminence, with careful nurture, is now inimitable and therefore, probably impassable. It is this enviable Kingmaker status that informs its entire Horizons strategy.”
Auto Trader has previously spoken of three horizons for its business, each of which should mark a period of acceleration for the company.
Big potential in new car listings
In current focus in horizon one, is the used car market, but horizon two will see it use its platform to move into new car advertising. In horizon three, it hopes to take all car transactions off the dealership forecourt and be purely online.
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