Jefferies Upgrades Auto Trader to Buy on Growth Forecasts

Jefferies upgraded Auto Trader Group PLC (OTC:ATDRY) from Hold to Buy and raised its price target to GBP6.40 from GBP5.45, citing stronger-than-expected product average revenue per retailer growth. The upgrade signals renewed confidence in the digital automotive marketplace's revenue expansion despite recent execution challenges.

"Jefferies raised its normalized average revenue per retailer growth forecast to 4.5% from 3.0%, while lowering its fiscal year 2027 EBIT estimate by 3% to reflect temporary churn from what it termed the Deal Builder fiasco," according to an Investing.com report.

Deal Builder Adoption and Operational Recovery

The analyst revision follows a turbulent period for Auto Trader's Deal Builder product rollout. Commercial missteps and communication issues in late 2025 created friction with retail partners, leading management to establish Customer Advisory Groups to mend dealer relations.

Despite the initial disruption, operational metrics show expanding reach. Deal Builder adoption has climbed to cover more than 55% of all dealer listings, although direct monetization of the tool remains low as retailers integrate the software into their sales workflows.

Diverging Views on ARPR Ceilings

While Jefferies sees a clear runway for product-driven top-line gains, competing financial institutions maintain a more cautious posture on the UK-based platform. Rothschild Redburn recently initiated coverage on Auto Trader with a Neutral rating and a GBP5.00 price target, warning clients that average revenue per retailer may be approaching a structural ceiling in the core domestic market.

What Is at Stake for Auto Trader

Analyst sentiment hinges on Auto Trader's ability to extract higher yields from its dominant market share in online vehicle advertising without alienating its dealer network. The balance between pushing new software features like Deal Builder and maintaining steady retailer retention will dictate whether the company hits Jefferies' newly elevated ARPR growth targets through fiscal 2027.