The CAR Group Limited (ASX: CAR) share price had a strong start to the week on Monday.
The ASX 100 share ended the session 4.5% higher at $35.14.
Investors were buying the auto listings company's shares following the release of its full year results.
The carsales.com.au operator reported a 41% increase in revenue to $1.1 billion and a 24% lift in adjusted net profit to $344 million.
And looking ahead, the market was pleased to see management guide to "good growth" in revenue and profits in FY 2025 in constant currency.
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Can this ASX 100 share keep rising?
The good news is that it may not be too late to buy CAR Group's shares. That's the view of analysts at Goldman Sachs, which are tipping the ASX 100 share to deliver market-beating returns over the next 12 months.
According to a note, in response to its full year results, the broker has retained its buy rating on CAR Group's shares with a trimmed price target of $40.90. Based on its current share price $35.14, this implies potential upside of 16.3% for investors over the next 12 months.
In addition, Goldman is forecasting a 2.3% dividend yield in FY 2025, boosting the total potential return to approximately 18.5%.
What did the broker say?
Goldman was pleased with what the company reported. It listed the positives as follows:
(1) Trading in first 6 weeks of FY25 has started well, giving confidence in its 'good' earnings growth guidance for FY25; (2) AU Dealer and Media revenue growth outlook ahead of GSe, with CAR continuing to execute in Media (which it is now leveraging offshore); (3) Trader revenue guidance reassuring given the challenging macro environment – we had seen this as a key risk. FY25 growth is supported by better than expected dealer subscriber trends in 2H24 (flat vs. GSe data of -2% to -6%), and FY25 set to potentially benefit from Camping World (c.200 dealerships), Marine (dealers grew +81% to 1,500, will start monetizing within 6 months), Media growth (Int. Media grew +29% in FY24E), depth & private (with a new ad tier to be launched); (4) Price rise in Korea of 10% on key guarantee product (>50% ad volume); (5) CAR balance sheet leverage down to 1.7X (ND/EBITDA) – but mgmt. noted although being an acquisitive company, they are also cautious with a high bar for M&A (CAR spent A$37mn acquiring 50.1% of Autofact Chile, a vehicle information service in Apr-24).
In light of this, the broker remains positive on the ASX 100 share and is "increasingly confident in the company's earnings momentum (both locally & globally) – forecasting +11% EPS CAGR across FY24-27E."
