9:14 am, March 24, 2023
Shares in Inchcape took a hit yesterday after its own stockbroker issued a note of caution despite the global automotive distributor reporting a huge profit upswing.
Inchcape also has franchised dealerships in the UK representing Audi, BMW, Jaguar, Land Rover, Lexus, Mercedes-Benz, Mini, Porsche, Smart, Toyota and Volkswagen, while its retail brands include the used car outlet Bravoauto as well.
Yesterday, the company posted its accounts for 2022, showing a 50 per cent rise in pre-tax profit at £373m and an adjusted operating profit increase of 46 per cent to £411m on an 18 per cent gain in revenue to £8.133bn.
CEO Duncan Tait commented that Inchcape was ‘a business with great momentum and an exciting future’ but JP Morgan Cazenove was rattled by the fact there were no specifics as to how 2023 might pan out.
According to The Times today, JP Morgan Cazenove told its investors: ‘Inchcape did not provide a detailed 2023 full-year outlook, which might be seen negatively at this point in the year, in our view.’
It added: ‘We expect small negative revisions to consensus expectations.’
As a result, it reduced its forecasts for this year by four per cent, giving Inchcape a profit growth of some 18 per cent, reported The Times.
The fact that Inchcape’s broker had placed itself substantially under its peers’ consensus forecast was enough to cause a run on Inchcape’s shares, said The Times.
They closed at 758p – down 109p, or a massive 12.6 per cent – which cut the group’s market value to just above £3bn.
Only a month ago, Inchcape’s shares were trading at 941p, which was a 16-year high.
Another analyst – Citi – seemed to misjudge the mood of the market, though, with The Times quoting it as saying: ‘We do not expect a major share price reaction.’
