APE – Morgans rates the stock as Add

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The trading update reflected tougher market conditions and a softer-than-expected outcome for Automotive Holdings in the year to date. Morgans suspects this reflects a more conservative accounting treatment by AP Eagers, softer new vehicle sales, and underperformance by Automotive Holdings.

While AP Eagers has acquired a large and complex business with several underperforming parts the broker believes the eventual prize remains attractive. Add rating maintained. Target is reduced to $12.02 from $15.55.

Sector: Retailing.

Target price is $12.02.Current Price is $10.51. Difference: $1.51 – (brackets indicate current price is over target). If APE meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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