J.P. Morgan placed European used-car platform Auto1 Group on its Positive Catalyst Watch on Friday, retaining an "overweight" recommendation and a December 2027 price objective of €37 per share ahead of the company’s second-quarter results due on July 29.
The broker cited a primary driver for the watch designation: its quarter-to-date gross profit estimate is tracking about 2% ahead of market consensus. That outperformance is closely tied to the bank’s upward-tracking unit assumptions for the period.
J.P. Morgan’s model projects total Q2 unit volumes of 238,000, up 19% year on year and above the 234,000 consensus. By channel, the bank expects merchant units of 205,000 - a 16% rise - and retail units of 33,000, reflecting a 39% increase.
On operating metrics, the bank forecasts Q2 gross profit at €283 million versus a €277 million consensus figure. Adjusted EBITDA was forecast at €57 million, essentially in line with the consensus of €57.3 million. J.P. Morgan’s channel-level gross profit assumptions were €968 per merchant unit and €2,565 per retail unit.
Turning to full-year projections, J.P. Morgan trimmed its FY27 adjusted EBITDA estimate by 6% to €451 million, driven by more moderate gross profit expectations in the Retail segment - the only change in phasing the bank reported. The FY27 adjusted earnings-per-share estimate was reduced by 8% to €1.28. FY26 estimates were left unchanged. Despite the revisions, J.P. Morgan noted its FY27 figures remain about 23% above consensus.
Analysts from the bank conducted on-site visits in Berlin last week, hosted by Auto1’s CEO and CFO. The itinerary included the Charlottenburg pick-up and drop-off location and the Ketzin refurbishment centre, where management provided a detailed briefing on the Merchant portal.
The bank also addressed concerns about a decline in AutoHero inventory levels, attributing the decrease to faster inventory turns, a sourcing approach that responds to demand, and the implementation of new pricing mechanisms. J.P. Morgan said it expects inventory levels to normalise beginning in the third quarter.
Auto1’s June price index data showed European used-car prices down 1.1% year on year. J.P. Morgan argued that faster inventory turns and higher pricing visibility versus offline dealers mitigate that pricing risk.
To reflect the differing value creation profiles across Auto1’s Merchant and Retail divisions, J.P. Morgan shifted to a sum-of-the-parts valuation framework. Using that approach, and assuming a 26E-28E EBITDA compound annual growth rate of 58%, the bank arrived at a €37 fair value for the stock.
Contextual note - The bank’s watch designation is driven by near-term gross profit tracking and channel volume assumptions; the bank has adjusted its FY27 margin and EPS phasing for Retail while leaving FY26 estimates unchanged.