Shares in Auto Trader Group Plc fell by 4.8% after JP Morgan Cazenove put them on “negative catalyst watch” ahead of the company’s full-year results in May.

JP Morgan trimmed the price target from 623p to 608p due to tough automotive retail market conditions. At midday on Thursday, March 28, shares were down by close to 6.8% at 695.96.

On Tuesday, March 26, AutoTrader was the biggest loser on the FTSE 100 Index. The stock fell 5.7% in a week.

“We now see an increasingly challenging market backdrop coming to the fore — following six months of falling used-car prices (accelerating to -8% in February 2024) and meaningful margin erosion for U.K. retailers — which we expect to temper consensus expectations on the core marketplace business,” said JP Morgan Cazenove.

“Coupled with continued disappointments on the digital agenda — Autorama — we see building risk to consensus FY25 earnings expectations which we expect to weigh on the shares into FY24 results (May 30) and place the shares on negative catalyst watch into the earnings season.”

JP Morgan expects further share price underperformance “with a tougher market backdrop for 2024 along with higher-than-expected losses in Autorama, both of which we expect to weigh on company consensus FY25 earnings expectations and yield a cautious guidance for the year.”

JP Morgan blames falling used-car prices challenging retailer operating metrics in 2024.

“While we recognize good visibility into H224, we stay cautious on FY25 as management navigates a likely softer consumer backdrop, digital retail roll-out, and challenging retailer dynamics,” it added.

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