BUZZ-US auto dealers' stocks climb as Stephens initiates coverage
Shares of U.S. auto dealers rose following Stephens' initiation of coverage on the "Public 6" franchised dealerships. Lithia Motors increased by 3.6%, AutoNation by 1.8%, Group 1 Automotive by 2%, Penske Automotive by 1.1%, and Sonic Automotive by 2.5%. The brokerage views these companies as generating diverse cash flows and being shareholder-friendly, despite ongoing earnings normalization post-COVID. The S&P 500 automotive retail sub-index is up 16.5% year-to-date.
Shares of Lithia Motors (LAD.N) rise 3.6% to $271.09, AutoNation (AN.N) rise 1.8% to $161.57, Group 1 Automotive (GPI.N) rise ~2% to $346.80, Penske Automotive Group (PAG.N) rise 1.1% to $150.09 and Sonic Automotive (SAH.N) rise 2.5% to $54.90
Stephens initiates coverage for the “Public 6” franchised U.S. auto dealerships
Company Brokerage Brokerage LSEG data
rating PT median PT
Asbury equal-wei $216 $240
Automotive ght
Group (ABG.N)
AutoNation over-weig $210 $205
ht
Group 1 equal-wei $394 $397
Automotive ght
Lithia Motors over-weig $360 $345
ht
Penske equal-wei $161 $170.30
Automotive ght
Group
Sonic equal-wei $64 $63
Automotive ght
Brokerage believes the six public auto dealers generate diverse cash flow streams owing to essential transportation needs
“The current stock setup (for the companies) is tricky due to an on-going earnings normalization from a COVID era boom” - brokerage
Sees companies as “shareholder-friendly” businesses in long term
Up to last close, the S&P 500 automotive retail sub-index (.SPLRCAUTR) was up 16.5% YTD
