Inchcape Plc shares climbed more than 4% after J.P. Morgan moved the automotive distributor onto Positive Catalyst Watch, citing firmer-than-anticipated volume trends ahead of the company’s full-year 2025 results due to be released on March 3.
The stock was quoted at 837p as of Feb. 17, inside a 52-week trading range between 575p and 874p. As part of its reassessment, J.P. Morgan increased its price objective for December 2027 to 880p, up from a prior December 2026 target of 800p, while keeping its overall recommendation at "neutral."
Forecast revisions and valuation
Analyst Akshat Kacker at J.P. Morgan lifted the firm’s underlying EPS projections for 2025 and 2026 by 6% and 7% respectively, driven primarily by stronger vehicle volume growth in the Americas and in parts of Asia-Pacific. The bank’s 2025 underlying basic EPS estimate is 81.6p, which the firm notes is roughly 4% above the company-compiled consensus of 78.6p. For 2026, J.P. Morgan’s estimate is 93.8p, about 5% higher than the consensus of 89.2p.
Revenue forecasts were adjusted upward as well, with 2025 sales now expected to reach £9,174 million and 2026 sales forecast at £9,582 million. The 2026 sales projection is roughly 3.4% higher than the bank’s earlier £9,267 million estimate.
On a valuation basis, the stock is trading at 9x and 8x J.P. Morgan’s 2026 and 2027 P/E estimates respectively, sitting within the company’s historical multiple band of 8x to 11x.
Volume and regional performance
J.P. Morgan highlighted that after four straight quarters of organic volume decline, new car volumes returned to positive territory in the third quarter of 2025, rising 13% year over year. The bank projects fourth-quarter 2025 volumes to be up 15% year over year, producing a second-half rebound of 14% and supporting full-year 2026 EPS growth of 15%.
The Americas region was the largest contributor to the upgrade narrative. J.P. Morgan estimates the Americas will account for roughly 45% of operating profit in 2026 and pointed to country-level strength in 2025, with Colombia increasing 21% and Peru rising 25%. Chile posted a 3% increase.
Across Asia-Pacific, volumes were also strong on a year-over-year basis in 2025, with Hong Kong up 25% and Singapore up 22%. However, the bank flagged that margins in the region have contracted to about 6.5%, down from roughly 8% in 2023-2024.
Europe presented a mixed picture in 2025, with Belgium down 7% and Bulgaria up 12%.
Earnings, cash flow and returns
J.P. Morgan’s monthly EBIT tracker showed median year-over-year growth of approximately 9% since May 2025, which the bank attributes largely to the recovery in the Americas. The firm also expects free cash flow of about £340 million in 2025 and approximately £360 million in 2026. A £175 million share buyback is planned for 2026, which J.P. Morgan says implies total capital returns of about £300 million and an overall shareholder return yield of roughly 9.5%.
"Inchcape has struggled to grow underlying earnings since 2023, as shown in the earnings growth profile, excluding M&A contributions, despite transitioning to a higher-value add distribution model and diversifying with new OEMs and markets,"
The brokerage underscored several near-term and structural risks. It pointed to Inchcape losing representation of Geely and JAC Autos in Chile and observed market-share declines for Inchcape-distributed brands in parts of Asia-Pacific. For example, the bank noted Toyota’s market share fell in Singapore from approximately 18% to 14% and in Hong Kong from about 15.5% to 14.3%, while BYD, which is not distributed by Inchcape, became the top-selling brand in both markets.
Kacker said the maintained "neutral" rating reflects constrained visibility outside of end-market vehicle volume trends, increased uncertainty tied to the global expansion of Chinese original equipment manufacturers, and questions about Inchcape’s future merger and acquisition strategy.
J.P. Morgan listed downside risks including the possibility of non-renewal or cancellation of distribution contracts, weaker new-car sales in key markets, ongoing market-share erosion, and greater pressure on distribution margins.
Market reaction and outlook
Investors reacted to the note with a stock price rise exceeding 4% on the day of the broker update. The bank’s combination of upward revisions for near-term earnings and revenues alongside a neutral stance underscores the balance between improving operational momentum and persistent strategic and margin-related risks that could affect future performance.