This auto parts company’s shares are leading the way on the ASX 200 on Friday…
The post Why the ARB (ASX:ARB) share price is jumping 7% to a record high appeared first on The Motley Fool Australia. –
The ARB Corporation Limited (ASX: ARB) share price has been a very strong performer on Friday.
In fact, in afternoon trade the 4×4 parts company’s shares are the best performers on the S&P/ASX 200 Index (ASX: XJO) with a 7% gain to $45.23.
Why is the ARB share price charging higher?
Investors have been bidding the ARB share price higher today following the release of a couple of positive broker notes out of Ord Minnett and Wilsons.
In respect to the former, Ord Minnett believes that ARB is well-placed to benefit from growth in new vehicle sales. Particularly given strong demand for four-wheel drive and SUV vehicles. This should be supported by new store openings.
The broker commented: “Supportive factors such as the extension of the instant asset write-off scheme, continued demand for vehicles driven by domestic tourism and increased road use by households should continue to drive solid demand for new vehicles.”
Elsewhere, this morning analysts at Wilsons retained their buy rating and lifted their price target by almost 20% to $47.80.
Even after today’s gain, this price target implies potential upside of almost 6% over the next 12 months.
Why is Wilsons bullish?
Wilsons is positive on the company for the same reasons. It believes recent vehicle sales data and current trading conditions are supportive of the company’s growth.
Its analysts commented: “We remain attracted to ARB and its prospects for sustained sales growth through a continued shift to SUVs, significant investment in R&D, and penetration of export markets.”
Another positive that the broker highlighted was ARB’s recent agreement with Ford. That agreement will see ARB branded off-road accessories for Ranger and Everest vehicles sold as Ford licensed accessories through participating Ford dealers in Australia.
The products are due to go on sale with Ford in Australia in the second half of the year. After which, other selected Ford markets are expected to follow.
Wilsons suspects that this could lead to greater brand recognition in the lucrative USA market in the future.
Today’s gain means the ARB share price is now up a sizeable 46% since the start of the year.