Eagers Automotive's (ASX:APE) deal to acquire stakes in several dealerships in New South Wales and Victoria expands its metro exposure with minimal competition regulatory risk, enhances easyauto123 optionality, and underscores the firm's ability to compound growth, according to a Wednesday note by Jefferies.

The firm entered into a non-binding term sheet with GMG owners Greg Scott and his associates to acquire 49% of their interest in a portfolio of dealerships located on the Gold Coast and in metropolitan Sydney. It also agreed with Zagame Automotive Group to acquire Audi Center Melbourne and Audi Richmond, two large metropolitan dealerships in Melbourne.

This should increase the firm's domestic market share to around 15% from around 14% in fiscal 2025. Jefferies noted that negotiations with the European Union on a new free trade agreement were well advanced and likely to increase the luxury car tax threshold.

The investment firm maintained its buy rating and AU$29.50 per share price target on Eagers Automotive.