Eagers Automotive shares drop as UBS downgrades to 'sell'
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The news: Shares in Eagers Automotive dropped in morning trade after UBS downgraded its position on the car dealer group.
The numbers: Eagers shares were down 2.9% to $19.01 at 11:45am AEST, having advanced more than 80% over the last 12 months.
UBS downgraded the stock from 'neutral' to 'sell' but hiked its 12-month price target 11% from $14.80 to $16.50.
The context: UBS analysts said recent share price gains drove the downgrade. They also noted that Eagers' interest in offshore expansion may see the company explore new opportunities in Canada.
However, the analysts believe competitive M&A activity and higher acquisition multiples in Canada means finding an accretive acquisition to bridge its current valuation gap "may be challenging".
The source: UBS research
