AHG – Macquarie rates the stock as Upgrade to Outperform from Neutral

Macquarie believes Automotive Holdings will be a strong strategic fit with AP Eagers ((APE)), which has announced an all-scrip merger for the remaining shares it does not hold.

The broker believes the merger is compelling for shareholders of Automotive Holdings, providing a tactical opportunity. Automotive comparables ease materially after June suggesting a bottom in the industry may be approaching.

The broker upgrades to Outperform from Neutral and raises the target to $2.65 from $1.95.

Sector: Retailing.

Target price is $2.65.Current Price is $2.32. Difference: $0.33 – (brackets indicate current price is over target). If AHG meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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