Auto Trader Shares Slide After UBS Downgrade On Earnings Risk

Despite an initial rise, Auto Trader Group (LON: AUTO) shares fell more than 1% in Wednesday’s session after the stock was downgraded at UBS.

It is the second rating change for the second-hand automotive sales business this week.

UBS analyst Adam Berlin downgraded Auto Trader Group to Neutral from Buy, raising the firm’s price target on the stock to 630p from 600p per share.

Berlin told investors in a note that the recent 20% share price rise and incremental earnings risk due to falling listings are the reasons for the downgrade.

However, that contrasts Barclays’ view of the stock, which now see Auto Trader as a buy after analyst Andrew Rose upgraded the company’s shares to Overweight from Equal Weight with a 725p price target.

Rose believes the backdrop for European internet stocks is looking more evident in 2023 following a 2022 that he believes was “not a good vintage.”

In addition, the analyst stated in his research note to clients that he has confidence in Auto Trader’s growth.

A couple of weeks ago, This is Money reported that the surging prices of second-hand cars are showing signs of “slowing to a crawl.”

The site said that according to the latest data supplied by AA Cars the average price gain across 20 of the most popular used cars has all but stalled, with Ford’s Fiesta, the UK’s most-bought used car, even declining 2% YoY in price on the second-hand market.

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