On Thursday, BMO Capital Markets adjusted its outlook on AutoCanada (ACQ:CN) (OTC: AOCIF), lowering the price target to Cdn$19.00 from the previous Cdn$19.50. Despite the price target reduction, the firm retained its Market Perform rating on the company's stock.
The adjustment follows AutoCanada's third-quarter results for 2024, which indicated that vehicle demand is persisting better than initially anticipated. BMO Capital's analysis highlighted several positive factors, including the company's increased attention to operating expenses (opex), which is expected to yield cost savings in the upcoming quarters.
BMO Capital also noted that AutoCanada's valuation appears reasonable, provided that the company maintains consistent execution in the future. According to the firm's revised estimates, AutoCanada is trading at 7 times the expected Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for 2025 and 5 times the forecasted EBITDA for 2026.
The analyst from BMO Capital expressed an interest in additional data to better understand trends in vehicle demand and the unemployment rate, as well as seeking more consistent quarter-over-quarter results. Until further information emerges, BMO Capital advises maintaining the Market Perform stance on AutoCanada.
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