The Carsales.com Ltd (ASX: CAR) share price is down 11% over the past year as the company battles a tougher Australian market for new and used car sales, although its international businesses continue to grow nicely. For the six months ending December 31 2018 it posted an adjusted net profit of $60.2 million on revenue of $235 million, which were down 2% and up 17% respectively.
On June 13 it announced that it's planning to sell its 50.1% stake in car finance business Stratton Finance after a period of softer-than-expected performance for the division. At the time it also told investors that for the full year 2019 it expects to earn a net profit between $130 million to $132 million on revenue between $473 million to $475 million, which would represent profit growth between 0%-1%.
At the time the analysts at Goldman Sachs took another look at the business and came to the following conclusion on the expected full year profit. "We believe the marginally softer operating result was due to: (1) a disappointing Stratton performance; (2) lower than expected growth in dealer depth penetration given the challenging new car environment (still a positive contributor, just less positive than 1H19); and (3) some impact from the global economy/trade uncertainties impacting Korea."
As a result of its full analysis Goldman's has slapped a $13.60 12-month share price target on Carsales.com, which means today's shareholders could be in for a lean 12 months if its expectations are correct. Elsewhere it also recently put a $90.60 share price target on digital classifieds rival REA Group Limited (ASX: REA).
