Analysts at the City broker repeated their ‘buy’ recommendation for the stock as they upped their target to 620p from 470p.
As the leader in its field, much like the Yellow Pages in the classified ads space or Google in the search engine arena, they believe Auto Trader is in an enviable position.
“Consumers seek one place where they can find what they want and advertisers want one place where they can advertise to the maximum number of consumers,” read a note to clients.
“As the level of usage drives advertising, and advertising drives usage, it creates a virtuous circle with very strong ‘network effects’.
“This creates a very powerful reason to use the market leader (a comparable today is Google – even though switching to another Search engine is free, 85% of online searches are made using Google).”
The number crunchers also point out that it is hard for new players to break through, even those with deep pockets.
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