Buy Auto Trader - Correction over?

Auto Trader Group plc is a digital automotive marketplace. The Company is engaged in the business of buying and selling new and used vehicles. The Company also operates similar business in Ireland through its Website carzone.ie.

Auto Trader is forecast to post a rise in earnings of 12% in the current year. This follows three years of consecutive double-digit net profit growth, which suggests its business may be relatively resilient within what is a highly cyclical automotive sector. The company is in a dominant position within its industry with virtually no competition.

Best Broker Target Price: 640p (Liberum Capital 09/07/2019)
Worst Broker Target Price: 414p (JP Morgan Cazenove 17/07/2019)

Technical Analysis
Auto Trader has traded in a corrective channel since reaching all time highs in June this year. The corrective move appears to have stalled around the 38.2% Fibonacci support level which is from the October 2018 lows to the June 2019 all time highs. A bullish outside candle has been posted on the daily chart , which is positive for short term sentiment. The break of the corrective channel indicates the move lower has come to an end the long term trend can now reassert itself.

Recommendation: Buy
Buy between 515-540p
Stop: 505p
Targets: 600p
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