Investing.com – Cars.com accelerated Tuesday as Citigroup upgraded its rating on the company, citing an attractive valuation.
Citigroup upgraded Cars.com (NYSE:CARS) to buy from neutral as it noted that the company’s current valuation was low even when the prospect of an acquisition was excluded, sending the company's shares more than 4% higher. The Chicago-based company runs a digital research marketplace for car shoppers.
Since September, Cars.com has been exploring strategic alternatives, including a possible sale amid pressure from activist investor Starboard Value, which bought a 9.9% stake in the company in December 2017. The stake represented 9.58% of the outstanding shares as of March 30.
Starboard late last year suggested the company should sell itself or shake up its management hierarchy to bolster its stock price. Cars.com responded by slashing its workforce by nearly 8% as it sought to rein in costs.
The moves have not helped the stock. The shares peaked at $32.94 in July 2018 and slumped to an intraday low of $19.08 on June 26. They're down 2.3% in 2019.
The company, however, has not set a timetable for a sale and said it would not provide additional details until the board approves a specific course of action or determines further disclosure is appropriate or required by law.
The investment community is largely holding out for a possible acquisition of Cars.com, with CFRA in April maintaining its buy rating on the stock, which it said was predicated on a takeout.