AUTO: Cautious Outlook Will Shape Expectations After Key Price Objective Cut

Analysts have trimmed their price target on Auto Trader Group from approximately 770 GBp to around 630 GBp, reflecting more cautious assumptions on revenue growth, profit margins, and valuation multiples, despite some supportive broker commentary.

Analyst Commentary

Recent Street research on Auto Trader Group highlights a mixed but increasingly cautious backdrop, with the latest price target moves pointing to heightened scrutiny of the company’s valuation and execution risks.

Bearish analysts have most recently reduced their expectations, with a key cut in the target price to 630 GBp from 770 GBp by JPMorgan, reinforcing concerns that prior assumptions on growth and profitability may have been too optimistic.

While there have been supportive actions, including an upgrade to Add from a mid tier broker and incremental target price increases earlier in the year, these have been overshadowed by the latest downward revision. This signals rising unease about the sustainability of current trading momentum and the multiple investors are willing to pay.

Overall, the research flow suggests investors are being encouraged to reassess the balance between Auto Trader’s structural strengths and the near term challenges that could cap upside from here.

Bearish Takeaways

• The cut in the key 12 month price target to 630 GBp from 770 GBp implies reduced confidence in the company’s ability to deliver on previous revenue growth assumptions and margin resilience.
• Bearish analysts see the current valuation as demanding relative to revised profit expectations, suggesting that execution missteps or slower market activity could trigger further de rating.
• The shift from incremental target raises earlier in the year to a sizeable reduction now highlights rising concern that Auto Trader may be moving past the peak of its growth cycle in the near term.
• Maintained cautious ratings alongside the lower target price indicate limited expected upside from current levels, with risk skewed toward downside if market conditions or competitive dynamics worsen.

What's in the News

• Declared an interim dividend of 3.8 pence per share for the six months ended 30 September 2025, payable on 26 January 2026 to shareholders on the register at 5 January 2026 (Key Developments).
• Confirmed the interim dividend totals approximately £31.5 million, unchanged versus the prior year despite the higher per share payout, reflecting share count dynamics (Key Developments).
• Approved a final dividend of 7.1 pence per ordinary share for the year ended 31 March 2025 at the AGM held on 18 September 2025 (Key Developments).

Valuation Changes

• Fair Value has fallen slightly from 6.56x to 6.36x, implying a modest reduction in the implied valuation multiple.
• The Discount Rate has risen slightly from 8.10 percent to 8.49 percent, reflecting a marginally higher perceived risk profile or cost of capital.
• Revenue Growth has been reduced moderately from 5.83 percent to 5.11 percent, indicating more conservative assumptions on top line expansion.
• The Net Profit Margin has edged down from 48.72 percent to 47.71 percent, pointing to slightly lower expected profitability levels.
• Future P/E has increased marginally from 19.59x to 20.00x, suggesting the shares are now modeled on a slightly higher earnings multiple despite the more cautious forecasts.