Market's view on Inchcape
Published on April 2024
- A stock watcher averaged down their investment in early March during a pullback, believing the drop was unjustified. They noted positive signs for a continued rise due to active management.
- Concerns were raised about significant insider director buys at AutoNation, hinting at possible insider dealing amid news of a potential acquisition of Inchcape’s UK operations.
- Inchcape’s decision to sell its low-margin UK Retail operations to Group 1 for £346m was seen as good news, with expectations of a big share buyback, although clarification was sought on what it means for shareholders and the timeline for benefits.
- There was a discussion about the overall increase in UK new car registrations in March, mainly due to a 30% rise in fleet market sales, while private sales were down by 7.7%.
- Concerns were expressed about Inchcape’s recent price drops and high acquisition rates, potentially facing tougher markets due to macroeconomic headwinds. The future of car distribution with OEMs selling directly to consumers was also noted as a longer-term concern.
- Mixed reactions were observed regarding Inchcape’s financial results and market reactions; while the results were decent, the immediate market reaction was poor, and concerns were raised about challenging outlooks and increasing debts.
- Liberum analysts remarked that Inchcape shares were undervalued, emphasizing the company’s strong balance sheet and long-term opportunities despite cautious views on Europe for 2024, offset by stronger growth prospects in Asia.
- A stock watcher noted the sharp increases in contract rates for vehicles like the Audi A3, suggesting a bright future for the company.
- Jefferies set a target price for Inchcape, indicating a substantial potential upside from the current share price.