Shares for the future: a rare double downgrade
A revolt against a new service, management change and geopolitical risk has forced analyst Richard Beddard to lower scores for both these companies.
5th December 2025 10:09
by Richard Beddard from interactive investor
Today, I am downgrading two shares. One, in part, because of its own actions, and one because of circumstances largely out of its control.
- Invest with ii: Top UK Shares | Share Tips & Ideas | Cashback Offers
Autotrader: deal-breaker
When I scored Auto Trader Group (LSE:AUTO)in July, it had begun to roll out its new Deal Builder. This is an important step in the company’s long-term aspiration to bring more of the car buying process online.
Autotrader is an online car marketplace, serving dealers and car buyers. Mostly it earns money from listings, advertisements placed by dealers. This is a business model that predates the internet, when Autotrader was a magazine.
Deal Builder, though, is much more. Before, a customer interested in buying a car would call or message the dealer. Now there are two more options. A customer can reserve the car for £99, or “build a deal”, which allows customers to add a part-exchange, complete a finance application from the retailers’ panel of lenders or Autotrader’s broker if the dealer doesn’t provide finance, choose between home delivery and picking the car up from the dealer, and reserve the car.
Originally piloted as an optional add-on, Autotrader changed tack in July by rolling Deal Builder out for all advertisers. It said this roll-out was accelerating in November’s half-year results.
But by prioritising the options that channel sales through to Deal Builder on its app and website and by requiring customers to sign in to Autotrader to message dealers, the company provoked a dealer rebellion being played out on online forums and YouTube. Autotrader says Deal Builder customers are more committed buyers, but dealers say they are receiving fewer leads.
Autotrader has responded to dealer criticism by rejigging the design of its website and app pages to give equal prominence to the options to call or message a dealer. It has also promised more support as Deal Builder is rolled out and it plans to set up dealer advisory panels. It has not disclosed any financial impact from lost and downgraded advertising subscriptions.
- The Income Investor: does BP have dividend investing appeal?
- Stockwatch: a bullish or bearish Budget for these four stocks?
- Five top share trades for 2026
Since Autotrader is ploughing on with the roll-out, it must believe winning back the trust of dealers is mostly about presentation. Now it is tweaking the Deal Builder design in response to complaints and making a bigger effort to engage with dealers, [hoping] they will come to appreciate the better-quality leads while still receiving messages and calls.
But the botched launch also raises questions about Autotrader’s strategy. The company’s brand is so strong, it has a monopoly on online car advertising in the UK. Autotrader says it balances the interests of consumers and dealers. But it also has another constituency to satisfy, and that is Autotrader itself, its employees and shareholders.
By bundling Deal Builder advertising subscription packages, Autotrader wants to charge more for them. In theory, charging everybody more brings in more revenue than selling add-ons to portions of the dealer base. It also makes the car buyer’s experience more coherent by providing the same page for every dealer. It only works though, if most dealers recognise the value.
If Autotrader has to roll back or partially implement Deal Builder because dealers believe it has overreached, or finds it difficult to raise prices because dealers do not recognise the value, where will the growth come from? Autotrader can’t grow much by selling more online advertising because it already sells most of it.
Events this November show how dependent dealers are on Autotrader. That is a powerful reason to own the shares. But it also shows that Autotrader is dependent on dealers. If it looks like the company is gouging customers by adding features they don’t want and charging them more for it, that is not the win-win situation I am looking for.
Auto Trader | AUTO | Online marketplace for motor vehicles | 02/12/2025 | 7/10 |
How capably has Auto Trader made money? | 3.0 | |||
Auto Trader has grown revenue and profit at about 10% CAGR over the last decade by selling advertising subscriptions to car dealers and additional packages to generate, promote and price listings. As the biggest classified site by far, powerful network effects pull in buyers and dealers. | ||||
How big are the risks? | 2.0 | |||
Because Auto Trader is dominant it must do more for existing retail customers to grow. It is not clear to me what the potential for growth is and retailers have new competitors: leasing companies, online leasing comparison sites, and manufacturers themselves. | ||||
How fair and coherent is its strategy? | 2.0 | |||
Autotrader must satisfy car dealers and car buyers. The Autotrader app is highly rated, but the poor reception of Deal Builder shows dealers are questioning whether it is adding enough value to justify price increases. Employees are motivated and loyal. | ||||
How low (high) is the share price compared to normalised profit? | 0.0 | |||
Low. A share price of 634p values the enterprise at £5,467 million, about 18 times normalised profit. | ||||
NB: Bold text indicates factors that reduce the score. Bold and italicised text doubly so. The maximum score is 3 for each criterion except price, which has a maximum of 1 (explainedhere) | ||||
In a blog published on Autotrader, chief executive Nathan Coe offered an apology to dealers for not communicating the Deal Builder roll-out better. Perhaps the initiatives that follow will strengthen its relationship with them.
My doubts, though, have resulted in a one-point reduction in Autotrader’s score. Half a point for the botched launch, which I will probably remove when it is clear relations with dealers have improved.
The other half point will not be returned until it is clear that Autotrader has added sufficient value to raise prices.
Autotrader raises prices at annual pricing and product events. The next one is April. If it achieves an above-inflation price rise without more discontent, perhaps things are OK.
Judges Scientific: good news, bad backdrop
Judges Scientific (LSE:JDG)’s veteran founder is stepping down as chief executive next February. The company has grown principally by acquisition and David Cicurel has been the scientific instrument manufacturer’s principal dealmaker.
His retirement is not in itself particularly good news, but it was becoming inevitable given his age. The good news is Judges Scientific appears to have planned the succession meticulously in recent years, strengthening the board and creating a broader executive committee.
The new chief executive is Tim Prestidge, who joined nearly three years ago and is currently business development director. Previously, he was a divisional chief executive at Halma, another very successful serial acquirer of technology businesses.
Besides David Cicurel, the longest-serving board member is Brad Ormsby, who has been chief financial officer for a decade. Mr Cicurel is not stepping back from the board though; he will become non-executive chair.
Although management changes can unsettle me, this one doesn’t.
- Trading Strategies: predicting the end of this bull market
- Stock market review: best and worst in November 2025
- Sign up to our free newsletter for investment ideas, latest news and award-winning analysis
I am nicking half a point from Judges’ score though. When I scored the share in May, I added a “brief note on geopolitics”. Judges is a global exporter, and it faces challenges in the world’s two biggest markets for scientific instruments: China and the US. The US government has dramatically reduced the scientific funding of universities which are big customers, and China is on a self-sufficiency drive.
I wrote that “penalising the company’s score because it is a successful exporter serving a wide variety of customers seems perverse”.
I think that was naive. I value these companies using their historical earning power (average return on capital). If Judges’ prospects are reduced in China, which it previously thought of as a high-growth market, and in the US, its biggest market after Europe, then I must account for the risk that growth and profitability will not be as commanding as in the past.
This downgrade is also a matter of consistency. Since I scored Judges, I have scored Renishaw (LSE:RSW) and Oxford Instruments (LSE:OXIG), two other export champions. I recognised the geopolitical risk in their scores, so I need to recognise it in Judges’.
Judges Scientific | JDG | Manufactures scientific instruments | 02/12/2025 | 6.8/10 |
How capably has Judges Scientific made money? | 3.0 | |||
Under founder and chief executive David Cicurel, JDG has achieved double-digit revenue and profit CAGRs, high levels of profitability and strong cash flows by buying and operating niche manufacturers of scientific instruments. | ||||
How big are the risks? | 1.5 | |||
As Judges Scientific grows, it is buying riskier, pricier and more complex businesses. At 91% of operating capital, financial obligations are high by my standards and Judges. Reduced funding at US universities and China's self-sufficiency drive means growth will be harder to come by. | ||||
How fair and coherent is its strategy? | 2.5 | |||
Scientific instruments enable research, which is beneficial to humanity. The company's strategy is to roll up more businesses. It is also doing more to foster organic growth, perhaps mitigating challenging growth prospects somewhat. | ||||
How low (high) is the share price compared to normalised profit? | -0.2 | |||
High. A share price of 5,700p values the enterprise at £438 million, about 19 times normalised profit. | ||||
NB: Bold text indicates factors that reduce the score. Bold and italicised text doubly so. The maximum score is 3 for each criterion except price, which has a maximum of 1 (explainedhere) | ||||
30 Shares for the future
Here is the ranked list of Decision Engine shares. I review the scores at least once a year, soon after each company has published its annual report. The price scores are calculated using the share price prior to publication.
Generally, I consider shares that score more than 5 out of 10 to be worthy of long-term investment in sizes determined by the ideal holding size (ihs%).
Tristel (LSE:TSTL) has published its annual report and is due to be re-scored.
company | description | score | qual | price | ih% | |
1 | FW Thorpe | Makes lighting systems for commercial, industrial and public settings | 9.0 | 0.8 | 9.6% | |
2 | Howden Joinery | Supplies kitchens to small builders | 8.0 | 0.6 | 7.1% | |
3 | James Latham | Distributes imported panel products, timber, and laminates | 7.5 | 1.0 | 7.0% | |
4 | Bunzl | Distributes essential everyday items consumed by organisations | 7.5 | 0.6 | 6.1% | |
5 | Solid State | Manufactures electronic systems and distributes components | 7.0 | 1.0 | 5.9% | |
6 | Jet2 | Package tour operator and leisure airline | 7.0 | 1.0 | 5.9% | |
7 | Softcat | Sells software and hardware to businesses and public sector | 7.5 | 0.4 | 5.9% | |
8 | Hollywood Bowl | Operates tenpin bowling centres | 7.5 | 0.1 | 5.2% | |
9 | Churchill China | Manufactures tableware for restaurants etc. | 6.5 | 1.0 | 5.0% | |
10 | Oxford Instruments | Makes imaging and semiconductor manufacturing systems | 6.5 | 1.0 | 5.0% | |
11 | Bloomsbury Publishing | Publishes books and educational resources | 7.5 | -0.1 | 4.8% | |
12 | Porvair | Manufactures filters and laboratory equipment | 8.0 | -0.7 | 4.6% | |
13 | Renew | Maintenance and improvement of national infrastructure | 7.5 | -0.2 | 4.6% | |
14 | Cohort | Manufactures/supplies defence tech, training, consultancy | 8.0 | -0.8 | 4.4% | |
15 | Advanced Medical Solutions | Manufactures surgical adhesives, sutures and dressings | 6.5 | 0.6 | 4.2% | |
16 | Volution | Manufacturer of ventilation products | 8.5 | -1.5 | 4.1% | |
17 | Auto Trader | Online marketplace for motor vehicles | 7.0 | 7.0 | 0.0 | 4.1% |
18 | Anpario | Manufactures natural animal feed additives | 7.0 | 0.0 | 4.0% | |
19 | Focusrite | Designs recording equipment, synthesisers and sound systems | 6.0 | 1.0 | 4.0% | |
20 | Macfarlane | Distributes and manufactures protective packaging | 6.0 | 1.0 | 4.0% | |
21 | Cake Box | Cake shop franchise and sweet manufacturer | 7.0 | -0.1 | 3.8% | |
22 | YouGov | Surveys public opinion and conducts market research online | 6.0 | 0.9 | 3.7% | |
23 | Judges Scientific | Manufactures scientific instruments | 6.8 | 7.0 | -0.2 | 3.6% |
24 | Goodwin | Casts and machines steel and processes minerals for niche markets | 8.5 | -1.7 | 3.6% | |
25 | Games Workshop | Designs, makes and distributes Warhammer. Licenses IP | 8.5 | -1.7 | 3.5% | |
26 | Keystone Law | Operates a network of self-employed lawyers | 7.5 | -0.8 | 3.4% | |
27 | 4Imprint | Customises and distributes promotional goods | 8.0 | -1.6 | 2.9% | |
28 | Renishaw | Makes tools and systems for manufacturers | 6.5 | -0.3 | 2.5% | |
29 | Quartix | Supplies vehicle tracking systems to small fleets | 7.5 | -1.8 | 2.5% | |
30 | Tristel | Manufactures disinfectants for simple medical instruments and surfaces | 7.5 | -2.0 | 2.5% |
Click on a share's score to see a breakdown (scores may have changed due to movements in share price). Key: qual is the share’s score out of 9 for the three quality factors (capabilities, risks, and strategy), price is the price score from -3 to +1, and ih% is the suggested ideal holding size as a percentage of the total value of a diversified portfolio.
Richard Beddard is a freelance contributor and not a direct employee of interactive investor.
Richard owns Autotrader and many shares in the Decision Engine. He weights his portfolio so it owns bigger holdings in the higher-scoring shares.
For more on the Decision Engine, please see Richard’s explainer.
Contact Richard Beddard by email: richard@beddard.net or on Twitter: @RichardBeddard
AIM stocks tend to be volatile high-risk/high-reward investments and are intended for people with an appropriate degree of equity trading knowledge and experience.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
Disclosure
We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.
Please note that our article on this investment should not be considered to be a regular publication.
Details of all recommendations issued by ii during the previous 12-month period can be found here.
ii adheres to a strict code of conduct. Contributors may hold shares or have other interests in companies included in these portfolios, which could create a conflict of interests. Contributors intending to write about any financial instruments in which they have an interest are required to disclose such interest to ii and in the article itself. ii will at all times consider whether such interest impairs the objectivity of the recommendation.
In addition, individuals involved in the production of investment articles are subject to a personal account dealing restriction, which prevents them from placing a transaction in the specified instrument(s) for a period before and for five working days after such publication. This is to avoid personal interests conflicting with the interests of the recipients of those investment articles.