Jefferies sees some positives for Peter Warren Automotive but warns of falling auto demand

Peter Warren Automotive Holdings

10/07/2022 22:53

** Jefferies trims PT on Australia's motor vehicle dealer
Peter Warren Automotive Holdings  PWR.AX  to A$2.70 from A$4.00,
retains "buy" rating
    ** Auto demand is correlated to household income/house
prices and outlook for both is negative, so we're cautious on
the sector - Jefferies
    ** Brokerage says CY22 auto demand seems secured by the
order backlog, so near-term earnings should be strong, given
record margins
    ** Brokerage adds FY23 on, conditions become cloudy as high
margins may persist in FY23, but falling household income may
see auto demand weaken
    ** Brokerage sees PWR's national market share going to 10%
over time from the current 2%, which could be a powerful driver
of earnings 
    ** Jefferies trims EPS estimate for FY22 and FY24 by 2% and
8% respectively, but raises estimate for FY23 by 7%
    ** All five analysts covering the stock rate it "buy" or
higher; their median PT is A$3.08 - Refinitiv data
    ** As of last close, stock down 28% this year

 (Reporting by Himanshi Akhand in Bengaluru; Editing by Howard
Goller)
 ((Himanshi.Akhand@thomsonreuters.com;))