In FY21 Pendragon achieved its highest EBIT in over a decade, in part a function of strong new and used car margins, but equally due to aggressive cost reduction. Average staff numbers fell by 43% FY19-21, with sales per employee at what looks like an unsustainable level. To achieve its FY25E PBT target, we think that cost will have to be put back in and sales growth will have to be stronger than guidance implies. Bid speculation sets the floor to the shares and we raise our TP from 21p to 28p, but a premium to peers would otherwise be unwarranted. Our SoTP analysis suggests a bid at 32p would price in management’s FY25E targets. Hold.