5 Reasons TrueCar Will Outperform The Market

JMP Securities upgraded shares of TrueCar Inc (NASDAQ: TRUE) to Outperform from Market Perform based on five reasons. The firm said numerous aspects of the company's business are improving, although each are still in their infancy, leading the analyst to expect consistent outperformance in shares.

Analysts Ronald Josey, Andrew Boone and Shweta Khajuria premised the upgrade on the following factors:

1. Conversion rates, which have improved 20 percent sequentially in the third quarter for new car desktop users. The analysts believe the metric should continue to improve as mobile and affiliates benefit from recent product changes.
2. TrueCar's new technology platform Capsela: The analysts believe it can significantly improve product development and time to market.
3. The best ever dealer relations the company has got.
4. The mix shift to used cars should lead to improved revenue growth and profitability.
5. Expectations that margins could inflect in 2017, as the company emerges from investment mode.

JMP Securities believes the changes put in place by CEO Chip Perry have created a strong foundation, such that 2017 is likely to be the year when the company begins to benefit from the investments done in 2016. Although the shares have run up significantly recently, relative to the broader market, the firm believes they can continue to outperform going forward, as revenue growth is set to accelerate in 2017, as margins expand.

JMP Securities has an Outperform rating and a $17 price target for the shares of TrueCar. At last check, shares of TrueCar were up 2.32 percent at $13.21.

Image Credit: By Valder137 [CC BY 2.0], via Wikimedia Commons