Bank of America Corp. Upgrades KAR Auction Services to Buy (KAR)

KAR Auction Services (NYSE:KAR) was upgraded by equities research analysts at Bank of America Corp. from a “neutral” rating to a “buy” rating in a research note issued to investors on Monday, Analyst Ratings reports. The firm currently has a $30.00 target price on the stock, up from their previous target price of $23.00. Bank of America Corp.’s target price points to a potential upside of 14.16% from the company’s current price.

The analysts wrote, “Due to what appears to be the onset of a meaningful recovery in wholecar auction volume at ADESA, we are raising our estimates, PO, and rating on KAR from Underperform to Buy. Specifically, we are raising our 2014e EBITDA from $565mm to $600mm, 2015e from $602mm to $644mm, and our PO on KAR shares from $23 to $30, based on a 2014e EV/EBITDA multiple of approximately 9X. We note that we had previously valued KAR at 8X EV/EBITDA, which represented a meaningful discount to other aftermarket companies with less exposure to the downturn in wholecar volume. As a result of the early signs of recovery, we believe 9X our 2014e is warranted.”

A number of other firms have also recently commented on KAR. Analysts at JPMorgan Cazenove raised their price target on shares of KAR Auction Services from $25.00 to $29.00 in a research note to investors on Friday. They now have an “overweight” rating on the stock. Separately, analysts at Credit Suisse initiated coverage on shares of KAR Auction Services in a research note to investors on Tuesday, July 30th. They set an “outperform” rating on the stock. Finally, analysts at Northcoast Research upgraded shares of KAR Auction Services from a “neutral” rating to a “buy” rating in a research note to investors on Monday, June 17th.

One analyst has rated the stock with a sell rating, two have assigned a hold rating and eight have assigned a buy rating to the stock. The company has an average rating of “Buy” and a consensus price target of $25.40.

KAR Auction Services (NYSE:KAR) traded up 1.18% on Monday, hitting $26.59. KAR Auction Services has a 52-week low of $16.28 and a 52-week high of $26.49. The stock’s 50-day moving average is currently $24.52. The company has a market cap of $3.671 billion and a price-to-earnings ratio of 34.99.

KAR Auction Services (NYSE:KAR) last released its earnings data on Tuesday, August 6th. The company reported $0.34 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.31 by $0.03. The company had revenue of $541.40 million for the quarter, compared to the consensus estimate of $518.72 million. During the same quarter in the previous year, the company posted $0.26 earnings per share. The company’s revenue for the quarter was up 10.9% on a year-over-year basis. Analysts expect that KAR Auction Services will post $1.20 EPS for the current fiscal year.

The company also recently declared a quarterly dividend, which is scheduled for Thursday, October 3rd. Stockholders of record on Tuesday, September 24th will be given a dividend of $0.19 per share. This represents a $0.76 dividend on an annualized basis and a yield of 2.89%. The ex-dividend date of this dividend is Friday, September 20th.

In other KAR Auction Services news, EVP Warren Byrd sold 5,122 shares of the company’s stock in a transaction that occured on Wednesday, August 7th. The stock was sold at an average price of $24.87, for a total transaction of $127,384.14. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this link.

KAR Auction Services, Inc, is a provider of vehicle auction services in North America. The Company operates in three business segments: ADESA, Inc (NYSE:KAR), Insurance Auto Auctions, Inc (IAAI) and Automotive Finance Corporation (AFC).