Car dealer Inchcape moved almost 10% higher this afternoon thanks to some upbeat brokers notes ahead of next week's results and glimmers of recovery from the car market.
In a sign of these depressed times, a 30% year-on-year drop in car production for June is being welcomed as positive news for the car market today.
The Society of Motor Manufacturers and Traders figure is a sharp drop but nowhere near as steep as May's 43% slump. June's shortfall is the smallest of the year so far.
SMMT's chief executive Paul Everitt turns to his own driving pun to sum up the market:
"The UK motor industry is weathering the global recession and beginning the long road to recovery."
For car dealer Inchcape the news combines with a cheery mood among many analysts ahead of next Wednesday's results.
David Jeary at Investec says:
"On the basis of its pre-close IMS pointing to Q2 pre-tax profits "significantly ahead" of the £20m delivered in Q1, we are forecasting interim pre-exceptional PBT of £50m."
"The longer-term potential for the group is substantial on the basis of more normalised market conditions and higher level of operating margin, given the benefits of operational gearing on a now much reduced operating cost base."
Analysts at Panmure Gordon are upbeat on the UK car market's prospects of recovery and have raised their target price on Inchcape from 18p to 25p "as investor sentiment shifts towards the sector and focuses on the long term attractions of the business." But they add:
"That said, with earnings recovery still in the early stages and fragile, we remain neutral on the shares."
Societe Generale analysts said earlier this week that Inchcape "remains one of the best recovery stories in the sector".
The shares were up 2.25p, or 9.5%, to 26p in afternoon trading.
