The Bapcor Ltd (ASX: BAP) share price has been a very strong performer on Thursday morning.
At the time of writing, the auto parts company's shares are up almost 7% to $7.71.
Why is the Bapcor share price zooming higher?
Investors have been bidding Bapcor's shares higher today after it was the subject of a bullish broker note.
According to the note out of Citi, its analysts have upgraded the company's shares to a buy rating with an improved price target of $8.25.
Based on the current Bapcor share price, this implies potential upside of 7% over the next 12 months even after today's strong gain.
Citi is also forecasting a 23 cents per share fully franked dividend in FY 2022. This represents a 3% yield at the current share price.
Why did the broker upgrade its shares?
The note reveals that Citi made the move largely on valuation grounds. This follows a significant pullback by the Bapcor share price since August.
In addition, the broker is positive on the company's medium term outlook. This is thanks to its growth plans and the upcoming reopening of New South Wales and Victoria from lockdowns.
Citi commented: "We upgrade to Buy as we see the risk/reward tradeoff to be more favourable following the -14% share price decline since the August 2021 peak. We see the company well placed to benefit from the reopening of NSW and Victoria, which is expected start from October 2021."
"Bapcor's medium term growth strategies of rollout, private label penetration and supply chain optimisation remains intact. Further, our analysis of the proposed FY22 CEO LTI scheme suggests FactSet consensus medium term earnings expectations could be conservative," it added.
Today's gain means the Bapcor share price is trading broadly flat in 2021 but up 12% on a 12-month basis.
