Sterne Agee CRT Raises Price Target on Kar Auction Services (KAR) Following 2Q
Sterne Agee CRT reiterated a Buy rating on Kar Auction (NYSE: KAR), and raised the price target to $50.00 (from $49.00), following 2Q15 results. Analyst Ali Faghri expects improved flow-through in 2H15 as acquisition costs and FX headwinds moderate.
Faghri commented, "KAR's 2Q15 results support our thesis that an increase in off-lease vehicles will benefit ADESA volumes and favorable salvage fundamentals will drive growth at IAA. Strong volumes more than offset modestly weaker pricing, and we expect improved flow-through in 2H15 as acquisition costs and FX headwinds moderate. More importantly, KAR demonstrated its commitment to increasing returns to shareholders and continues to have the flexibility to increase buybacks, raise the dividend and make strategic acquisitions. Despite the tempered stock reaction to 2Q15 results, performance was solid and momentum is strong in all three business segments. Stay Long."
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Shares of Kar Auction closed at $38.64 yesterday.