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magazineMotorpoint shares now up 42% since we said to buy
Motorpoint (MOTR) 270p
Gain to date: 42.1%
Original entry point: Buy at 190p, 14 May 2020
We are encouraged by fresh evidence of strong post-lockdown trading at car dealership Motorpoint (MOTR).
A positive update on trading accompanied the company’s AGM on 24 August, with key operational and trading metrics over the last 11 weeks ‘comfortably ahead’ year-on-year according to the group.
News that chief financial officer James Gilmour is leaving the company is a modest blow – broker Shore Capital describing him as ‘well-regarded’ – but not a reason to change our view on the stock. Particularly as Gilmour is sticking around for a while to ensure an orderly transition.
As Shore analyst Darren Shirley notes, caution remains on the sustainability of any recovery in consumer confidence due to the lasting impact of Covid-19, and how trading will evolve as we move into the autumn and beyond.
‘How much of current trading still reflects pent-up demand from lockdown? How much is the group’s disruptive model driving share gains?’ he asks.
We should get some answers with a first-half trading update on 8 October with Shore Capital planning to reinstate earnings forecasts at that point.
SHARES SAYS: Still a buy for now, we will keep a close eye on October’s trading statement and updated forecasts.
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