Barrington Research Downgrades Kar Auction (KAR) to Market Perform, Sees Shares in the $11-$12 Range

August 10, 2011 2:43 PM EDT
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Price: $17.84 -0.56%

Rating Summary:
    10 Buy, 8 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 10 | Down: 9 | New: 61
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Barrington Research downgraded shares of Kar Auction (NYSE: KAR) to a Market Perform rating from its previous rating of Outperform and reiterated its price target of $15.

The firm notes that the downgrade is due to a "very sluggish outlook for KAR’s ADESA whole car segment." They are forecasting that both adjusted EBITDA and adjusted EPS growth will be halted in 2012.

Sequentially and year-over-year vehicles auctioned by KAR’s whole car auction segment ADESA declined 6 percent and 14 percent. Management highlighted that the outlook for the second half of 2011 doesn't look any better as they forecast negative unit growth all the way into 2012.

Barrington Research believes that shares will fall as low as $11-$12 and encourages investors to wait it out a little.

An analyst at the firm comments, "there was a sense from the conference call that the stellar performance that has been exhibited from AFC and IAAI may not overcome the erosion in the fortunes of the ADESA business segment."

For more ratings news on Kar Auction click here and for the rating history of Kar Auction click here.

Shares of Kar Auction closed at $16.70 yesterday.


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