Jefferies moved Autotrader Group Plc to a "hold" rating on Monday, pointing to uncertainty stemming from the company’s confirmed April price rise and the risk that dealers may react negatively after earlier complaints over its Deal Builder offering.
Shares of the Manchester-headquartered business were trading lower, falling 2.6% at 08:10 ET (13:10 GMT) on the news. At the time of Jefferies' report, Autotrader stock was priced at 568.40p.
The downgrade follows remarks made by chief executive Nathan Coe during an appearance on the Car Dealer Podcast on Jan. 23, where he said that Autotrader’s dealer packages will increase by 5.5% from April 1. Jefferies noted that while that figure clarifies the magnitude of the upcoming change, it does not settle doubts over whether dealers will churn in response.
Jefferies said the principal driver of the rating change was the difficulty of forecasting the effects of the April pricing event, especially in light of dealer dissatisfaction reported late last year. Although the 5.5% rise falls within the range previously outlined by Autotrader’s chief financial officer, the brokerage emphasised that dealer reactions remain uncertain.
The firm described consensus expectations for FY27 revenue per retailer as fragile. According to Jefferies, consensus forecasts appear to assume an above-trend acceleration in both stock-related revenue and cross-sell or up-sell activity heading into FY27 - assumptions the brokerage views as uncertain.
Jefferies quantified the contribution of the announced price rise to consensus-implied growth in average revenue per retailer. The 5.5% increase would represent about 165 of the roughly 220 in total average revenue per retailer growth implied by consensus, leaving more than 50 expected to come from stock volumes and non-pricing products such as bolt-ons and package upgrades.
Jefferies also pointed to stock headwinds experienced in FY26, citing a 14 drag on stock-related average revenue per retailer and noting that whether that effect reverses is still debated.
Alongside the downgrade, Jefferies published a price target of 650.00p for Autotrader, implying potential upside of about 14% from the prevailing share price. The company’s market capitalisation stood at 5.2 billion, and its 52-week trading range ran from 554p to 920p.
Context and implications
Jefferies' move underscores how pricing decisions by digital marketplace platforms can have immediate implications for near-term revenue forecasts and investor sentiment. For Autotrader, the combination of a confirmed price hike and lingering dealer discontent has made future revenue per retailer projections harder to model with confidence.
What to watch next
- Dealer reaction to the April 1 price change, in particular any indications of churn.
- Whether stock-related revenue begins to reverse the headwinds seen in FY26.
- Updates to consensus expectations for FY27 revenue per retailer as new data emerges.