Liberum hikes price target on Lookers after update

Liberum hiked its price target on car dealership chain Lookers to 90p from 45p on Monday, keeping the rating at ‘buy’ after a "much stronger-than-expected" first-quarter trading performance.

"This combined with the ongoing benefits of the restructuring lead to a 97% increase to our lower end of the range FY21E adjusted profit before tax forecast," the broker said.

"The new management team is performing well and we expect the consumer environment to be supportive of the ongoing recovery."

Liberum said that while FY20 results and a refinancing are still pending, it does not expect material issues with either.

Lookers said last week that it was expecting annual profit to be "materially" better than market expectations after a strong first quarter and with showrooms about to reopen.

Liberum noted that its FY21 pre-tax profit estimate was at the lower end of the range of at £17.8m.

"Clearly, much depends on how strongly consumer spending returns, but we remain positive, given the experience coming out of the last lockdown," the broker said.