Is it time to sell your AutoCanada stock?

Desjardins Securities analyst Gary Ho initiated coverage of AutoCanada (AutoCanada Stock Quote, Chart, News, Analysts, Financials TSX:ACQ) with a “Hold” rating and a $27.00 target, citing the company’s simplified operations and debt reduction potential, but warning that weak consumer demand could limit near-term upside.

As reported by the Globe and Mail, in an Oct. 28 report, Ho noted that the Edmonton-based automotive retailer is emerging from its U.S. exit and cost restructuring as a more focused Canadian business. His target implies a negative 2.8% return, while the average analyst target is $24.71.

“A soft Canadian consumer and uncertain macro keep us on the sidelines for now, but we see value in ACX that is not reflected in the share price,” Ho said.

The analyst is encouraged by the company’s improving cost structure, potential recovery in used vehicle gross profit per unit and growing contribution from higher-margin businesses. Ho said parts and service, finance and insurance, and collision repair generate most of AutoCanada’s gross profit, with fixed operations and collision repair providing greater resilience during economic downturns. Used vehicle margins represent another potential earnings driver following weakness in the first half of 2026.

Ho expects improvements as the company’s sales mix shifts toward franchised dealerships. He also sees significant value in AutoCanada’s ACX collision repair business, which is undergoing a strategic review announced in September.

“We took a deep dive into ACX collision, meeting with its head of collision and touring the ACX Modern hub in Edmonton,” Ho said. He identified luxury vehicle repair certifications as an important competitive advantage, noting that dealerships rather than insurers tend to drive referrals for high-end repairs.

Ho also highlighted acquisition opportunities as independent collision repair shop owners approach retirement. “Our hypothetical bluesky scenario of scaling ACX to 10 centres by 2030 implies C$16.25–22.39/share for collision alone,” he said.

However, that valuation represents a hypothetical expansion scenario rather than his base-case forecast.

Ho expects proceeds from AutoCanada’s U.S. exit to support debt reduction, bringing leverage within management’s target range of two to three times in 2027. Lower debt could also provide additional financial flexibility for acquisitions in the collision repair business.

The analyst summarized his investment thesis as “a simpler, deleveraging platform; (2) a used vehicle GPU recovery; and (3) collision optionality.” Despite those opportunities, Ho remains cautious about the Canadian consumer and broader economic conditions.

“We would turn more constructive on a firmer Canadian consumer or further ACX progress that drives a rerating,” he said.

AutoCanada is scheduled to release its third-quarter results after markets close Nov. 12.

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