Macquarie analysts have gone back to grass roots, interviewing 15 car dealers to better understand Carsales.com and the car classifieds industry
Macquarie analysts have gone back to grass roots, interviewing 15 car dealers to better understand Carsales.com and the car classifieds industry. They say Our discussions with 15 car dealers re-affirm to us that 1. the Carsales website continues to deliver value for its product; 2. there is little effective direct competition; and 3. that the marketplace characteristics that support key revenue streams remain intact. Overall, we are comfortable modelling solid medium-term growth in Dealer revenues and earnings, underpinned by above-CPI average yield growth. Carsales stands out as a well entrenched marketplace business, with few visible threats to this standing. Future growth is likely to be driven by price rises (which the market will absorb), system growth in volumes, as well as dealer & data services, display advertising and non-auto. Macquarie have put an outperform rating on the stock with a 12-month price target of $10.40.