Carsales.com’s First-Half Result Ticks All the Boxes. Fair Value Estimate Raised to AUD 17.20.

We have increased our fair value estimate for narrow-moat-rated Carsales.com by 9% to AUD 17.20 per share following another good result from the company. Although we’ve slightly lowered our fiscal 2020 earnings forecasts, our 10-year EPS CAGR remains around 11% and we’ve increased our long-term earnings growth assumption to 4% from 3%, which is the main driver of the fair value increase. However, at the current market price of AUD 19.00, we continue to believe the shares are overvalued. Our fair value implies a P/E ratio of 31 versus 34 at the market price. Management continues to expect "solid" earnings growth in fiscal 2020, which we interpret is in line with our 4% EPS growth forecast.