CAR – Credit Suisse rates the stock as Outperform

Credit Suisse describes Carsales’ acquisition of the remaining 51% interest in Trader Interactive as paying a premium, but finds it justifiable given it anticipates the purchase will deliver strong earnings growth over a number of years.

The broker notes the company undertook a $1.2bn equity raising to fully fund the acquisition, and while a higher level of debt could have improved the accretion metrics the raise left the company at a comfortable gearing level.

The Outperform rating is retained and the target price decreases to $24.00 from $25.80, largely as a result of dilution from equity raising.

Sector: Software & Services.


Target price is $24.00.Current Price is $20.76. Difference: $3.24 – (brackets indicate current price is over target). If CAR meets the Credit Suisse target it will return approximately 13% (excluding dividends, fees and charges – negative figures indicate an expected loss).



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