Eagers Automotive's trading update to April revealed gross margins remain strong, though broad cost pressure is evident, which is being offset by structural cost-out initiatives. Management maintained FY23 revenue guidance.

No 1H revenue guidance was provided due to ongoing supply variability from port and shipping congestion which is impacting the core business, observes the analyst. Acquisitions supported 9% revenue growth to April.

The delivery constraints are partly contributing to a strong order book, which Morgans suggests relatively insulates the near-term performance.

The target falls to $15.20 from $15.80. Add.

Sector: Retailing.

Target price is $15.20.Current Price is $12.85. Difference: $2.35 - (brackets indicate current price is over target). If APE meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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