BTIG analysts initiated coverage of SunCar Tech Group (NASDAQ:SDA) with a Buy rating and a $12 price target, highlighting the company’s significant growth opportunities in China’s expansive automotive and insurance markets. With its three business segments targeting B2B automotive services and insurance intermediation, SunCar is well-positioned to capitalize on a combined addressable market estimated at $143 billion.
According to the analysts, Mainland China, the world’s largest vehicle market, provides a fertile landscape for SunCar’s growth, with approximately 350 million cars on the road and 25 million new cars sold annually. Despite its relatively small market share—around 1% in both B2B automotive services and eInsurance—SunCar is expected to achieve over 25% annualized growth in the coming years.
Several catalysts underpin this optimistic outlook. SunCar is beginning to tap into the gas-powered vehicle segment, marked by its recent partnership with SAIC’s Maxus brand. Additionally, the company is shifting focus toward insurance policy renewals, a vastly underpenetrated market where renewals outnumber new policies by 13 to 1. Enhancing commission rates in the eInsurance business also presents a significant opportunity; recapturing just half of the rate reductions seen in recent years could boost revenue by approximately 15% with high incremental margins.
According to the analysts, SunCar’s revenue is projected to grow at a compound annual growth rate (CAGR) of 28% through 2027, far outpacing its peers’ average growth rate of 9%.