Last Update 03 Dec 25

BAP: Future Earnings Will Benefit From Easing Sector Headwinds And Lower Discount Rate

Analysts have modestly raised their price target on Bapcor to reflect a slightly lower discount rate and broadly unchanged long term growth and profitability assumptions, aligning with recent peer target upgrades, such as Credicorp's increases from $242 to $310 and from $257 to $318.

Analyst Commentary

Recent actions by bullish analysts on regional peers, including higher price targets from JPMorgan, have reinforced confidence that sector headwinds are easing and that quality operators can sustain premium valuations. For Bapcor, this backdrop is shaping expectations for both upside potential and execution risk.

Bullish Takeaways

Bullish analysts view the modest price target uplift as evidence that Bapcor can justify a higher valuation multiple if it delivers consistent earnings growth in line with leading sector peers.
Improved sentiment on comparable names, highlighted by JPMorgan's higher target on Credicorp, supports the case that investors are willing to reward resilient balance sheets and predictable cash flows, both key attributes for Bapcor.
The broadly unchanged long term growth outlook, combined with a lower discount rate, suggests confidence in Bapcor's ability to navigate macro volatility while steadily compounding earnings.
Peer target upgrades are seen as a validation of the auto aftermarket and related service segments as structurally attractive, bolstering the argument for sustained growth and margin resilience at Bapcor.

Bearish Takeaways

Bearish analysts highlight that the price target revision is modest and largely driven by technical factors such as the discount rate, indicating limited upward revision to core earnings assumptions.
The reliance on peer moves to justify valuation leaves Bapcor exposed if sentiment toward sector leaders reverses or if macro conditions deteriorate, which could compress multiples.
With long term growth and profitability forecasts largely unchanged, there is concern that upside from operational outperformance or strategic initiatives may already be priced in.
Comparisons to peers that have secured multiple target increases in a short period raise questions about whether Bapcor can match that pace of execution and earnings surprise without stretching capital or operational capacity.

What's in the News

Bapcor issued new earnings guidance for the first half of FY26, forecasting statutory NPAT of $3 million to $7 million, excluding any potential impairment related to its New Zealand segment (company guidance).
For full-year FY26, Bapcor expects statutory NPAT of $40 million to $50 million, again excluding any potential 1H26 impairment tied to the New Zealand business (company guidance).
The explicit separation of possible New Zealand impairments from NPAT guidance highlights ongoing portfolio pressure in that market and signals potential restructuring or write down risk in 1H26 (company guidance).

Valuation Changes

Fair Value: Unchanged at A$3.21 per share, indicating no revision to the underlying intrinsic valuation.
Discount Rate: Fallen slightly from 8.02 percent to 7.99 percent, reflecting a marginally lower perceived risk or cost of capital.
Revenue Growth: Effectively unchanged at around 1.27 percent, suggesting a stable view on top line expansion.
Net Profit Margin: Stable at approximately 4.39 percent, indicating no material change in long term profitability assumptions.
Future P/E: Edged down slightly from 15.19x to 15.18x, pointing to a negligible adjustment in the valuation multiple applied to forecast earnings.

Investments in automation, digital platforms, and e-commerce are expected to boost efficiency, margins, and revenue growth across retail and wholesale channels.
Network optimization and expansion in high-growth segments aim to capture rising demand, defend market share, and support sustainable long-term profitability.
Operational restructuring, geographic concentration, and rising competition pose risks to profitability, growth, and long-term market position in a challenging consumer and macroeconomic environment.

Catalysts

About Bapcor

Supplies vehicle parts, accessories, automotive equipment, and services and solutions in Australia, New Zealand, and Thailand.What are the underlying business or industry changes driving this perspective?

Ongoing investments in supply chain automation, digital platforms, and ERP consolidation are poised to enhance operational efficiency, reduce costs, and improve working capital management, setting the stage for margin expansion and sustainable earnings growth in future periods.
A strategic reset focused on network optimization-closing underperforming sites, opening new high-potential branches, and rationalizing the warehouse footprint-positions the company to capture growth from the expanding vehicle fleet and urbanizing population, boosting revenue potential and operating leverage over the long term.
Enhanced e-commerce capabilities (e.g., new Autobarn website, growing online sales, expanded loyalty program) and targeted digital investments will enable better penetration of the growing online auto parts retail market, supporting recovery and growth in retail revenues and potentially lifting overall group margins due to greater operational efficiency.
The ongoing aging of the vehicle fleet in Australia and New Zealand continues to drive demand for aftermarket parts and repairs, which, combined with Bapcor's leading wholesale and trade offerings as well as the company's efforts to grow key account sales, should support resilient future revenue streams and defend market share even in a soft consumer environment.
Strategic focus on higher-margin private label and owned brand products, along with targeted expansion in fast-growth segments such as truck and electrical, could gradually drive gross margin improvement and stronger net margins as operational changes begin to yield benefits from FY26 onwards.

Bapcor Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Bapcor's revenue will grow by 2.2% annually over the next 3 years.
Analysts assume that profit margins will increase from 1.4% today to 5.1% in 3 years time.
Analysts expect earnings to reach A$106.9 million (and earnings per share of A$0.31) by about September 2028, up from A$28.1 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting A$125 million in earnings, and the most bearish expecting A$96.2 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.6x on those 2028 earnings, down from 42.0x today. This future PE is lower than the current PE for the AU Retail Distributors industry at 40.6x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.32%, as per the Simply Wall St company report.

Bapcor Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Revenue and earnings declined across multiple segments (Retail, Specialist Wholesale, and New Zealand), with only modest growth in Trade-suggesting Bapcor's financial performance is heavily exposed to challenging macroeconomic or consumer environments, which may further impact top-line growth and profitability if these trends persist.
Bapcor has undergone significant restructuring, including large-scale store and warehouse closures and executive turnover, indicating both past operational inefficiencies and the complexity/risk associated with major organizational change initiatives; failure to deliver on promised cost savings and growth could pressure net margins and delay earnings recovery.
Retail division continues to underperform with declining revenue, falling EBITDA and margin, and ongoing need for store closures and management turnover-exposing Bapcor to risk from strong competition, weak consumer discretionary spend, and continuous pressure on segment profitability.
Bapcor's heavy reliance on Australia and New Zealand for revenue, with slow progress on international expansion and only minor positive contribution from Thailand, increases vulnerability to local economic cycles and limits geographic revenue diversification, potentially constraining long-term revenue growth and earnings resilience.
Recent results highlight market share losses, especially to larger and more rapidly growing competitors (e.g., GPC Asia Pacific), and ongoing challenges in stabilizing and expanding new or acquired segments (such as CVG/truck and electrical parts), indicating rising competitive intensity could erode Bapcor's revenue, gross margin, and market positioning over time.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of A$4.248 for Bapcor based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$6.0, and the most bearish reporting a price target of just A$2.95.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be A$2.1 billion, earnings will come to A$106.9 million, and it would be trading on a PE ratio of 16.6x, assuming you use a discount rate of 7.3%.
Given the current share price of A$3.48, the analyst price target of A$4.25 is 18.1% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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