Citi ups Adevinta on 'cautiously optimistic' car dealer views

Adevinta ASA

04/04/2023 09:45

** Citi raises Norwegian digital marketplace specialist
Adevinta  ADEA.OL  to "buy" from "neutral", citing encouraging
comments from car dealers, rising likelihood of OLX Brazil stake
sale, and discounted valuation
    ** The brokerage says its European Car Dealer Survey in
March struck a "cautiously optimistic tone" with dealers seeing
improved demand for used cars in France
    ** Dealers have also increased online classifieds spending
plans since November, especially in Germany, says Citi, boosting
its confidence that Adevinta's price hikes will land well
    ** The broker also sees increasing likelihood of Prosus
 PRX.AS  buying Adevinta's 50% stake in their OLX Brazil JV,
given Prosus' strong balance sheet and comments on investment
priorities
    ** A sale would "unlock value" and return cash to Adevinta,
Citi says, estimating it could return up to 10% of its market
cap while deleveraging up to 2.5x
    ** Citi adds the Adevinta stock trades at a discount to
peers and sees limited downside risk
    ** Out of 20 analysts that cover Adevinta, 14 rate the stock
"strong buy" or "buy", four "hold" and two​ "sell"
    ** The stock rises more than 6% in morning trade, on track
for its best day since November

 (Reporting by Greta Rosen Fondahn)
 ((Greta.RosenFondahn@thomsonreuters.com))