CAR Group (CAR) - Modest upgrades

CAR Group is an online portal for vehicle and marine sales that operates in Australia, New Zealand, Brazil, South Korea, Malaysia, Indonesia, Thailand, Chile, China, the US and Mexico. The company was formerly known as carsales.com and changed its name to CAR Group in November2023. It was incorporated in 1996 and is headquartered in Melbourne.

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Ord Minnett has reviewed its FY25 forecasts and the corresponding consensus estimates for online classified advertising companies under coverage. As a result, our full-year EPS forecasts for Carsales (CAR) rise by 2% across FY25, FY26 andFY27.

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Our group operating earnings (EBITDA) forecasts for the online vehicle sales portal have been changed to reflect the depreciation in the Australian dollar against the greenback to circa US$0.62 currently from around US$0.65 at the start of December, with only minimal adjustments to our operational numbers. We also note the effect of the weakness of the Brazilian real against the US dollar on Carsales’ Web motors business, although we still expect robust growth in South America’s most populous country. Our FY25 numbers now align with consensus expectations. We maintain our Accumulate recommendation and target price of$39.00 on Carsales.

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