Citi analysts have revised the price target up for Australian automotive parts supplier GUD Holdings (ASX:GUD) to A$12.79 from A$12.69, while retaining a ‘buy’ rating.

GUD Holdings announced earlier this week the sale of its water systems unit, Davey Water Products, to water treatment and solutions provider Waterco for a total enterprise value of A$64.9 million.

Davey contributed approximately 15% to GUD’s FY22 revenue of A$835.5 million, with the remainder having been generated by its two automotive units.

The brokerage noted that the divestment reconceptualises GUD as a pure-play automotive parts supplier, and anticipates the sale will enhance group EBITA margin by approximately 100 basis points.

Citi believes the sale situates GUD Holdings to facilitate further auto acquisitions in the medium term.

Citi adjusted its FY24 core net profit view down by 3.3% to A$132.7 million, and by 4.3% to A$141.5 million for FY25, compared to A$89 million in FY22.

Nine out of ten analysts rate GUD ‘buy’ or higher, and one ‘hold’, with a median price target of A$11.80.

GUD Holdings is an Australian automotive parts supplier.