Morgans initiates coverage of Peter Warren Automotive with an Add rating and $4.05 target price. It’s considered the industry could consolidate at a fast pace over the next five years.
This should leave the company (with 2.2% market share) and other larger players like Eagers Automotive ((APE)) with 11%, well placed to capitalise, explains the broker.
The analyst sees scope for continued demand strength (coming off multi-year lows) and for gross margins to settle above pre-covid levels. Forward orders across the industry are at record levels.
While Morgans’ forecasts paint a steady growth profile, the highly likely M&A potential is not factored-in, as yet.
Sector: Retailing.
Target price is $4.05.Current Price is $3.60. Difference: $0.45 – (brackets indicate current price is over target). If PWR meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).
