Market Overview

Analyst: TrueCar Stock Has No Upside

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Shares of TrueCar Inc (NASDAQ: TRUE) were slightly down on Thursday, after Wunderlich analyst Blake T. Harper initiated coverage on the stock with a Hold rating. The price target was set at $16, the same price it was trading when the report was rolled out –- this implies no upside potential.

Related Link: TrueCar's Latest Vehicle Forecast Is Worth Looking At

The analyst explains the lukewarm rating was based on the firm’s checks with dealers, which “confirm the value of TrueCar leads.”

However, analysts' survey of car-buying consumers also shows “limited brand awareness versus larger competitors. A large opportunity exists to more efficiently allocate OEM incentives, but we [the analysts at Wunderlinch] believe the company may have to spend more than is projected in sales, marketing, and product development to realize its growth strategy, which could delay its projected profitability ramp.”

Below are a few highlights:

  • TruCar’s brand presence is barely nascent in a field that is already crowded and competitive.
  • The company is investing in mobile ease-of-access and “in data capabilities to improve its value to buyers, dealers, and manufacturers.”
  • “Enabling more efficient use of OEM’s $46B in incentive spending is part of the bull case.”
  • “Higher marketing and product spend may be necessary, just as dealers are trying to generate more of their own leads.”

While TrueCar’s platform is interesting, even intriguing, “the ability to generate sustainable positive free cash flows and profitability is still in question.”

Latest Ratings for TRUE

DateFirmActionFromTo
Mar 2019DowngradesBuyHold
Mar 2019AssumesSell
Feb 2019DowngradesBuyNeutral

View More Analyst Ratings for TRUE
View the Latest Analyst Ratings

Posted-In: Blake T. Harper WunderlichAnalyst Color Price Target Initiation Analyst Ratings

 

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