AP Eagers provided a 1H20 update with underlying profit (NPBT) of $40.3m, well ahead of the Morgans forecast of $25m.

The broker believes the company has realised a structural reduction in its cost base to the tune of -$78m per year, which should materially enhance the company's ability to counter future uncertainties.

The broker also expects the company may now pursue new opportunities. The Next100 project has accelerated during covid-19. This incorporates an operational restructure, AotoMall, shopping centre format and used car strategy.

Following material upgrades by Morgans, the target price is increased to $8.83 from $7.30 and the Add rating is maintained.

Sector: Retailing.

Target price is $8.83.Current Price is $7.99. Difference: $0.84 - (brackets indicate current price is over target). If APE meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2020 Acquisdata Pty Ltd., source FN Arena