UPDATE: Stephens Downgrades Kar Auction (KAR) to Equal Weight
Stephens analyst Daniel Imbro downgraded Kar Auction (NYSE: KAR) from Overweight to Equal Weight with a price target of $16.00 (from $23.00).
The analyst comments "KAR reported 4Q20 operating adj. EPS of ($0.01), missing our/ consensus estimates of $0.21/$0.28. Adj. EBITDA of $67.5 million also missed our/consensus estimates of $107.2 million/$117.1 million. Volume decelerated more than we anticipated, and given the increased fixed-cost base ADESA saw greater gross margin pressure than anticipated. We do not believe we have the visibility to underwrite volume improvement until at least 2H21, and without that improvement the 2021 margin guidance appears to be back-half weighted. While we do believe that repossession volumes will come back over the coming 12 months, this appears to be less of a tailwind than previously assumed and in the meantime the shift towards digital/dealer-to-dealer appears to be margin dilutive (BacklotCars gross margins in low 40%s)."
Shares of Kar Auction closed at $15.93 yesterday.
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