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Important information: The value of investments can go down as well as up so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This is a third-party news feed and may not reflect Fidelity’s views.

Morgan Stanley downgrades Auto Trader to 'underweight'

(Sharecast News) - Morgan Stanley downgraded Auto Trader on Friday 'underweight' from 'equalweight' and cut the price target to 600p from 625p. "We see a mismatch between relative share strength and near-term Deal Builder growth, combined with relaxed sentiment around Google's entry into the UK," it said.

Morgan Stanley said it sees market/consensus expectations as skewing optimistic on near-term Deal Builder monetisation, while the market seems much more relaxed above the competitive threat from Google in cars than that from CoStar in real estate.

"As a result, AUTO now trades at a premium to Rightmove, which we do not see as warranted given similar revenue/EPS growth trends," it said.

"There is no change in our overall view of Auto Trader as a business, arguably the best-in-class car vertical operator in Europe. There is a long-term bull argument to be made around Deal Builder, but timing is not right yet, in our view."

Within European classifieds, the bank's preferred names remain Schibsted, which is its top pick, and Rightmove, which it sees as having more uncertainty/risk priced in.

At 1055 BST, Auto Trader shares were down 4.2% at 723.60p.

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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