Broker snap: Momentum is with Pendragon

8th Oct 2009 12:51

Panmure Gordon has turned bullish on Pendragon after holding a meeting with Trevor Finn, the car dealer's chief executive officer.The broker believes that strategically Pendragon intends to focus on leveraging off its existing assets, where it has 'very good exposure to large scale volume brands such as Ford and Vauxhall', and to concentrate on driving debt down to around £200m over the next two to three years. 'Acquisitions clearly look to be off the agenda,' Panmure Gordon believes.With the shares having fallen back below 40p from their 52-week high of 45p achieved in mid-August, Panmure Gordon has switched its recommendation from 'hold' to 'buy'. 'We see positive risk/reward in terms of trading/forecast momentum in the near term, with the extension of scrappage likely to ensure a good start to 2010E [2010 earnings] in the new car market, while used car margins should prove robust in the near term,' the broker said, adding that positive news flow from sector peers should also drive the share price higher.