August 3rd, posted the AA idea, but advised to wait for the stock to go back up above 225 – which it has failed to do – dropping to as low as 155 post results.
Consensus target price now 270, but clearly the market disagrees with stock so much lower.
If they sell their Insurance business which generates around 17% of earnings, they could get around 50p a share (assumes a 10x multiple), which leaves the Road Side assistance business which is the bulk of trading on a EPS of around 7x.
This seems cheap but the debt load is fairly high – they need to start paying down debt and the business could attract a higher multiple.
Fair Value now 200. The stock seems to have found a base around 160.
Trade: Buy at 160, take profit target 195, stop 145.