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BCA shares 'underperforming' as prepares for full year results announcement

Stockbroker Zeus Capital Research has reiterated its stance on BCA Marketplace and says the market dynamics remain positive for the remarketing and automotive services group.

Zeus, which acts as joint stockbroker for BCA, said when BCA’s full year results are announced on June 28 it will expect an update on how the group is working more closely with vendors, which Zeus believes is a major upside opportunity.

It also expects to hear of efficiency gains in its logistics business and an update on the integration of the SMA auction sites.

Analyst Mike Allen said: “The UK new car market continues to go from strength to strength with the highest Q1 on record this year. We believe foreign exchange will continue to drive OEM decision making, and at the current level of €1.27, we believe there is enough margin opportunity for OEMs to put stock into the UK market.

“Used car volumes also remain healthy along with fleet and rental vehicles, which is good news for future levels of visibility as BCA typically transacts at the end of the first life of the vehicle.”

“The shares have underperformed during the last two months (shares – 9% in absolute terms), which we believe presents an attractive entry point. If we look at the share price performance vs. the dealers it has even started to underperform here, which we believe is anomalous given the quality of the business and growth potential.

“The underperformance vs. Auto Trader also presents an opportunity in our view. While Auto Trader maintains higher margins, it is purely UK focused and in our view faces significant challenges in driving long term growth from its current position.”

Zeus said it continues to believe the growth potential is significant from here across all divisions, with potential for further strategic acquisitions.

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