TrueCar (NASDAQ: NASDAQ:TRUE) has experienced a revision in its stock outlook by a Needham analyst, resulting in a lowered price target. The new target is set at $3.75, decreased from the previous $4.00, while the Buy rating remains unchanged.
The analyst pointed to TrueCar's solid industry positioning, emphasizing the growth in new vehicle lead generation as a positive sign.
This aspect is becoming increasingly crucial as vehicle inventories rise, leading to more incentive offers from TrueCar's Original Equipment Manufacturer (OEM) partners.
Although the count of franchise dealers has reached a steady state without showing growth, there are positive signs as units per franchise dealer reached a multiyear high in the second quarter.
Despite maintaining a bullish outlook on TrueCar's market position, the analyst has adjusted medium-term estimates to remain well below the company's fiscal year 2026 guidance. This conservative stance leaves room for potential upside.
However, the recent quarter's gross margins did not meet expectations, leading to revised forward assumptions due to this newfound uncertainty.
The updated price target of $3.75 is approximately 10 times the forecasted adjusted EBITDA for fiscal year 2025.
InvestingPro Insights
TrueCar's (NASDAQ: TRUE) recent financial performance and stock market activity provide a nuanced picture for investors. According to InvestingPro data, TrueCar holds a market capitalization of approximately $242.92 million, with a notable gross profit margin of 89.35% over the last twelve months as of Q2 2024. Despite this strong margin, the company's stock has experienced a significant decline over the past week, with a price total return of -14.17%. This reflects the market's reaction to the short-term challenges faced by the company.
One InvestingPro Tip that stands out for TrueCar is its impressive gross profit margins, which suggest the company has a strong handle on its cost of goods sold relative to its sales. This is particularly relevant given the analyst's concerns about gross margins in the recent quarter. Additionally, TrueCar's liquidity position is robust, with more cash than debt on its balance sheet and liquid assets that exceed short-term obligations. This financial stability is crucial for investors considering the analyst's medium-term earnings revisions and the anticipation that the company will not be profitable this year.
For those looking to delve deeper into TrueCar's financial health and stock performance, InvestingPro offers a comprehensive set of additional tips. As of now, there are six more InvestingPro Tips available, which can provide further insights into TrueCar's valuation, profitability, and market expectations. To explore these tips, investors can visit https://www.investing.com/pro/TRUE.
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