Broker tips: Auto Trader, AB Foods, Vaalco Energy

9th Nov 2026 14:53

(Sharecast News) - Berenberg upgraded Auto Trader to 'buy' from 'hold' on Monday and raised its target price on the stock to 650p from 510p, arguing that concerns surrounding the company's troubled Deal Builder rollout were now largely behind it and that the outlook has improved materially.

The German bank pointed to stronger-than-expected growth in retailer numbers following Auto Trader's first-half results, with dealerships returning to the platform after the company implemented remedial measures and consultation efforts. Berenberg said the recovery was ahead of both its own forecasts and broader market expectations, prompting it to increase its forecasts for dealer numbers.

Berenberg also highlighted improving conditions for motor retailers compared with a year ago, alongside opportunities created by the group's growing use of artificial intelligence. Berenberg believes Auto Trader to be increasingly well positioned to use AI and its extensive data assets to enhance customer and dealer experiences, while potentially creating new revenue streams outside its traditional advertising products.

While acknowledging that concerns around AI disruption continue to weigh on the valuation, the broker argued that such fears were overdone given Auto Trader's investment in technology and ability to monetise new products.

Berenberg also noted solid growth in average revenue per retailer and said the company was seeing encouraging uptake of new services, despite ongoing cost pressures facing dealers.

At around 14x forecast FY27 earnings, the broker said the shares now trade at an unjustified discount to sector peers and offer an attractive entry point.

Deutsche Bank lifted its price target on Associated British Foods to 1,820p from 1,790p on Monday following the Primark owner's full-year results last week.

The bank said AB Foods reported FY26 largely in line with expectations and provided slightly more cautious guidance with regards Grocery EBIT for FY27.

"We update our model post the results and reflect the updated guidance," it said. "This sees a circa -1% profit before tax cut for FY27e and broadly unchanged for FY28e."

DB also said it was lifting its price target given the Staples peer valuation.

"The AB Foods investment case remains uncertain at this stage with both upside risks (from Sugar EBIT) and downside (from Sugar and Primark LFL) in the short term," it said. "We will get more visibility on the Sugar profit outcome in January but the main issue is the Primark LFL. 1Q has started off badly given the weather, a better October has not fully recovered the weak start and we remain concerned over the health of the consumer in France and Germany."

DB maintained its 'hold' rating albeit with more downside risk given the strong recent performance of the shares.

Canaccord Genuity cut its target price on Vaalco Energy to 765p from 800p on Monday, reflecting updated production guidance and a more cautious long-term outlook for the group's Etame asset in Gabon.

The Canadian bank, whih retained its 'buy' recommendation on the stock, said Vaalco's third-quarter results were solid operationally, with working-interest production rising 21% quarter-on-quarter to 25,300 barrels of oil per day, driven by progress in Côte d'Ivoire and Egypt. However, it said the financial benefits of the company's heavy investment programme were yet to fully materialise, with sales volumes increasing by a more modest 4%.

Canaccord Genuity expects a more meaningful uplift in earnings and cash flow from the fourth quarter onwards as production from the Baobab field ramps up and recent investment across Côte d'Ivoire, Egypt and Gabon begins to feed through into financial performance.

In the near term, however, elevated capital expenditure continues to weigh on the balance sheet, with net debt increasing to $188m at the end of September from $147m three months earlier, while liquidity fell to $112m from $153m.

Canaccord also noted that Vaalco had trimmed the upper end of its 2026 production guidance range, although it said this was partly offset by lower expected capital spending.

Looking further ahead, Canaccord said Egypt remained the standout performer in 2026, while Côte d'Ivoire was expected to drive production growth in 2027. It also forecasts a return to positive free cash flow from around spring 2027, accelerating in the second half of the year.