JPMorgan upgrades Auction Technology to 'overweight'

17th Sep 2024 10:22

(Sharecast News) - JPMorgan Cazenove upgraded Auction Technology on Tuesday to 'overweight' from neutral' as it argued the shares are overly discounting earnings risk into 2025.

It noted the stock has fallen 53% in the past year as macro factors pressured market growth, coupled with internal challenges from rotated volumes and rate card changes impacting performance.

"While some would argue that visibility still remains low near term, with a lack of company commentary on trading making the bottom hard to call, we see risk reward turning at these level," the bank said.

"We now screen (only) 3% below consensus on FY25 EBITDA (JPMe $86m) and argue that initiatives to drive gross merchandise value are bearing fruit, while levers to build monetization through value-added services can stabilize earnings and grow EBITDA +7% into FY25E."

In addition, JPM said it sees a strong case for rising cash returns to shareholders to stand as a near-term catalyst, and finds the valuation of 7.8x EV/EBITDA 2025E attractive on a growth adjusted basis, "with a high equity cash flow yield in-hand (8%)".

JPM cut its price target on the shares to 530p from 543p.

At 1020 BST, the shares were up 3.6% at 413p.