Motorcycle Holdings (ASX:MTO) shares rose almost 5% to $2.56 on Tuesday, driving their gains over the past three months to over 25%. The Australian stock has soared after the motorcycle and accessories dealer announced plans to acquire Mojo Group.
MTO agreed to purchase Mojo Group for AU$60 million in cash and shares. The transaction is expected to close on 31 October. Mojo sells imported motorcycles, scooters, ATVs, and related accessories and parts to customers in Australia and New Zealand.
MTO is looking to the Mojo acquisition to diversify and expand its business. In addition to selling motorcycles retail and supplying wholesale parts to, MTO also offers motorcycle repair services. Moreover, the company arranges motorcycle purchase financing for its customers. The company operates through brands such as TeamMoto Motorcycles, Gold Coast Harley-Davidson, Ultimate Motorbikes, and Morgan & Wacker BMW.
MTO remains on the lookout for additional acquisition opportunities as it looks to increase its market share and geographic reach. The company has its next dividend distribution date set for October 4. MTO shares currently offer an above-average dividend yield of 8.84% and a payout ratio of 20.6%.
Motorcycle Holdings share price prediction
According to TipRanks’ analyst rating consensus, MTO stock is a Moderate Buy. The average MTO share price prediction of AU$2.45 implies 4.3% downside, suggesting that the stock has already surpassed analysts’ expectations.
MTO stock is receiving favourable mentions on financial blogs. TipRanks data shows that financial blogger opinions are 100% Bullish on MTO, compared to a sector average of 65%.
Concluding thoughts
Motorcycle sales in Australia have continued to increase in 2022, which is a good sign for dealership operators like MTO. The company’s expansion efforts such through the Mojo acquisition should both increase its market share and unlock economies of scale.
