Now could be the time to pounce on the ASX 200 stock in this article.
That's the view of analysts at Bell Potter, who have just upgraded the stock to a buy rating.
Image source: Getty Images
Which ASX 200 stock?
The stock that Bell Potter has become bullish on this week is Eagers Automotive Ltd (ASX: APE).
It is the leading automotive retailer in Australia with a 14% share of the new vehicle sales market. It has 224 new car dealerships across 33 brands and 68 truck and bus dealerships across 12 brands in Australia.
Bell Potter believes that the ASX 200 stock is positioned to deliver a profit result slightly ahead of consensus estimates in FY 2026. Despite a soft start to the year, the broker believes things will pick up. This is especially the case given how it believes the soft start has been triggered by supply issues. It said:
There is no change in our forecasts which we only recently updated with the release of the 2025 result last month. We continue to forecast underlying operating PBT of $657m in 2026 which is only slightly above VA consensus of $655m. We acknowledge there has been a relatively flat or soft start to the year – deliveries flat in January and down 3% in February on pcps – but this appears mostly due to Toyota supply issues which we expect to be resolved over the course of the year.
We also believe the market dynamic this year will be more push than pull with the large increase in OEMs now selling into the Australian market and this will also drive volume. So we expect volumes to rebound over the coming months and deliveries for the year to be generally consistent with last year around 1.2m.
Upgraded to buy
Due to recent share price weakness, Bell Potter has upgraded the ASX 200 stock to a buy rating (from hold) with a slightly trimmed price target of $28.50 (from $28.75).
Based on its current share price of $21.11, this implies potential upside of 36% for investors over the next 12 months.
But the returns won't stop there. Bell Potter also expects an attractive 3.8% fully franked dividend yield this year, which boosts the total potential return to approximately 40%.
Commenting on its upgrade, the broker said:
Our updated TP of $28.50 is >15% premium to the share price so we upgrade our recommendation from Hold to Buy. Yes, we acknowledge Eagers is consumer facing but we see resilience in the both the new and used vehicle market in Australia as well as Canada. In our view the biggest risk to our upgrade is a protracted war in Iran and, while we cannot rule this out, the risk appears to have already had a negative impact on the share price.
We note the forward PE ratio is now back below 20x so the stock is looking value again and supporting this the yield has increased back up to around 4%. In terms of catalysts we expect the CanadaOne Auto acquisition to be completed by the end of the month and then we see potential for resumption of M&A activity in Australia and/or Canada without the need for a fresh equity raise (unless they are particularly big). And, as mentioned, we expect new vehicle deliveries to rebound and be stronger in the coming months as the Toyota supply issues are resolved.
