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(Sharecast News) - Jefferies upgraded Autotrader on Tuesday as it expects the company to lead the re-rating in the online classifieds sector, but downgraded Baltic Classifieds as it expects it to lag the re-rating.
The bank argued in January that Agentic AI fears were overdone. In a research note on Tuesday, it said: "We now argue that Agentic AI will make the online classifieds sector higher quality; a longer runway of growth, with a stronger network effect, and on a diminishing cost to serve.
"This Agentic Future will be bound only by our imaginations, and should be the sole domain of the platforms."
Jefferies said that similar to the way a website in the 1990s was a technology that powered a step change in utility for discovery - thereby disrupting newspapers - it thinks Agentic AI will be a technology that can power the next step change in utility.
"If so, the sector will have a longer runway of monetisation, defended by an even stronger network effect, and a lower cost to serve," it said.
The bank upgraded Autotrader to 'buy' from 'hold' and lifted the price target to 640p from 545p.
"We see Autotrader as standing alongside Scout24 as a leader in the Agentic Future," the bank said. "Until the Deal Builder fiasco in late 2025, we had always argued that Autotrader's execution of its progressive vision was good.
"Accepting the failures around Deal Builder communication and commercial roll-out were the humbling aspect of our Jan-26 downgrade to 'hold'. But as we stand here, we see reasons to be more optimistic again."
Jefferies upgraded Rightmove to 'hold' from 'underperform', keeping the price target at 465p.
"We now see Rightmove as firmly dragging itself into contention to be a leader in the Agentic Future," Jefferies said. "It retains a highly priced back-book (and all eyes on the 2-3 November hearings in the Newman Claim) and an operating free cash flow margin profile that has the taint of over-earning.
"But execution, thus far, of the new mission has been good." Jefferies added that Rightmove screens "very favourably" against its Agentic AI 'competitor', OpenClaw.
The bank downgraded Baltic Classifieds to 'underperform' from 'hold' and cut the price target to 1.85 from 2.29. Jefferies said: "We believe investor focus is shifting away from the strength of an online classifieds operator with the capital allocation and financial profile of BCG."
The bank said it's downgrading the shares "in the belief that, at some point in the medium term, BCG may announce an investment cycle that would bring its adjusted EBITDA minus capex margins from being a significant towards the top end of the peer group".
"The Agentic Future requires a different mindset; BCG's current approach appears to remain aligned with the Classifieds 1.0 model. While BCG is an exceptional business, we see scope for it to strengthen its position.
"We see little risk of disruption for BCG, but as we move forward with agentic experiences coming out of the peer group, we would expect increased pressure on the management team to change.
"Until we see evidence that BCG is moving in the right direction, we struggle to see a compelling case for the shares."
At 1050 BST, Autotrader shares were up 2.3% at 517p, Rightmove was 1.4% at 493.10p and Baltic Classifieds was 0.1% lower at 2.44.