Broker snap: Inchcape to benefit from scrappage schemes

2nd Oct 2009 13:04

Panmure Gordon has raised its target price for car dealer Inchcape as a number of its major markets begin to show signs of recovery, and now reckons the shares are worth buying.The broker's new target price is 42p, up from 29p previously, with the change prompted by an upgrade to its earnings forecasts for the current fiscal year and the next two years.'We upgrade our bottom of the range 2009E EPS [earnings per share] forecasts by 46%, 2010E by 40% and 2011E by 56%,' Panmure Gordon said. The broker expects the third quarter trading update on 28 October could provide a catalyst for other brokers to ratchet up their earnings forecasts.'We note that new scrappage schemes are either just starting to gather momentum or will shortly commence in countries such as Greece, Romania, and potentially Russia,' the broker said. Meanwhile, the 'China effect' seems to be having a palliative influence on the Australian market 'while car sales in Hong Kong have a 6-month lag effect with the Hang Seng index, which has also been strong of late.'Panmure Gordon has upgraded the stock from 'hold' to 'buy'.