AutoNation, Inc. (NYSE:AN) Receives Consensus Recommendation of "Moderate Buy" from Brokerages

Key Points

• Analysts remain broadly bullish: AutoNation has a consensus “Moderate Buy” rating, with 10 buys and 2 holds among 12 analysts. The average 12-month price target is $250, well above the reported $168.31 share price.
• Recent earnings beat expectations: AutoNation reported quarterly EPS of $5.56 versus the $5.48 consensus estimate, although revenue declined 0.6% year over year to $6.93 billion.
• Near-term operating risks are increasing: Used-vehicle and total retail unit sales declined, while management expects third-quarter gross profit per vehicle to fall about 10% sequentially. Softer service growth, weaker new-vehicle margins, affordability pressures and reduced EV demand could weigh on future profitability.

Shares of AutoNation, Inc. (NYSE:AN - Get Free Report) have earned a consensus rating of "Moderate Buy" from the twelve analysts that are presently covering the company, Marketbeat Ratings reports. Two analysts have rated the stock with a hold recommendation and ten have issued a buy recommendation on the company. The average twelve-month price target among brokerages that have covered the stock in the last year is $250.00.

Several brokerages have recently commented on AN. Barclays raised their target price on AutoNation from $255.00 to $260.00 and gave the stock an "overweight" rating in a research report on Wednesday, July 15th. Seaport Research Partners reissued a "buy" rating and set a $255.00 price target on shares of AutoNation in a research report on Monday, August 3rd. Morgan Stanley increased their price objective on AutoNation from $240.00 to $250.00 and gave the stock an "overweight" rating in a research note on Thursday, August 6th. Wells Fargo & Company raised their price objective on AutoNation from $202.00 to $224.00 and gave the stock an "equal weight" rating in a research report on Monday, August 3rd. Finally, Weiss Ratings cut AutoNation from a "buy (b)" rating to a "buy (b-)" rating in a research note on Thursday, September 3rd.

AutoNation Stock Down 3.8%

Shares of NYSE:AN opened at $168.31 on Friday. The company has a debt-to-equity ratio of 2.68, a quick ratio of 0.18 and a current ratio of 0.78. The company has a market cap of $5.56 billion, a PE ratio of 7.80, a price-to-earnings-growth ratio of 0.85 and a beta of 0.72. AutoNation has a 52 week low of $167.05 and a 52 week high of $235.81. The firm has a 50 day simple moving average of $204.71 and a 200 day simple moving average of $197.36.

AutoNation (NYSE:AN - Get Free Report) last posted its quarterly earnings data on Friday, July 31st. The company reported $5.56 earnings per share for the quarter, topping the consensus estimate of $5.48 by $0.08. AutoNation had a net margin of 2.82% and a return on equity of 31.24%. The firm had revenue of $6.93 billion for the quarter, compared to analysts' expectations of $7 billion. During the same period in the previous year, the company posted $2.26 EPS. The company's quarterly revenue was down .6% compared to the same quarter last year. As a group, research analysts expect that AutoNation will post 21.69 earnings per share for the current year.

Key Headlines Impacting AutoNation

Here are the key news stories impacting AutoNation this week:

• Positive Sentiment: Several analysts’ price targets remain materially above the current trading level, with a reported median target of $244.50. Institutional activity was mixed, but some large funds—including AQR Capital Management, D. E. Shaw and Sixth Street Partners—added shares during the second quarter. AutoNation Stock Forecast and Price Target
• Neutral Sentiment: AutoNation continues to benefit from comparatively stronger after-sales and finance operations, but recent operating data showed retail used-vehicle sales down 8.0% year over year and total retail unit sales down 6.4%, indicating uneven demand across the business. AutoNation Morgan Stanley Conference Transcript
• Negative Sentiment: Management expects third-quarter gross profit per vehicle to decline approximately 10% sequentially, partly because of model-year changeovers. Investors interpreted the forecast as a warning of near-term earnings and margin pressure. AutoNation Cautious Conference Commentary
• Negative Sentiment: Service growth has softened, new-vehicle margins are expected to weaken and consumer affordability remains a headwind. These factors could limit revenue growth and profitability in the near term. AutoNation Service Growth and Affordability
• Negative Sentiment: Demand for electric vehicles has weakened following the expiration of federal incentives, adding pressure to the outlook. Recent insider activity also showed sales rather than purchases, though those transactions are a secondary factor compared with the operating warning. AutoNation Warning Ahead of Third-Quarter Earnings

Insider Activity

In related news, Director Lisa Lutoff-Perlo sold 900 shares of the firm's stock in a transaction that occurred on Wednesday, August 5th. The shares were sold at an average price of $220.00, for a total transaction of $198,000.00. Following the completion of the sale, the director directly owned 7,989 shares in the company, valued at approximately $1,757,580. This trade represents a 10.12% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which can be accessed through the SEC website. 1.40% of the stock is owned by company insiders.

Hedge Funds Weigh In On AutoNation

Several institutional investors and hedge funds have recently modified their holdings of the stock. Redwood Investment Management LLC increased its stake in shares of AutoNation by 1.1% in the first quarter. Redwood Investment Management LLC now owns 5,372 shares of the company's stock worth $1,049,000 after acquiring an additional 61 shares during the last quarter. Mitchell Sinkler & Starr PA grew its stake in AutoNation by 3.6% in the fourth quarter. Mitchell Sinkler & Starr PA now owns 2,183 shares of the company's stock valued at $451,000 after purchasing an additional 75 shares in the last quarter. Bessemer Group Inc. grew its stake in AutoNation by 33.0% in the first quarter. Bessemer Group Inc. now owns 306 shares of the company's stock valued at $59,000 after purchasing an additional 76 shares in the last quarter. Parkside Financial Bank & Trust increased its position in AutoNation by 73.9% in the 2nd quarter. Parkside Financial Bank & Trust now owns 193 shares of the company's stock worth $36,000 after purchasing an additional 82 shares during the last quarter. Finally, IFP Advisors Inc increased its position in AutoNation by 20.4% in the 4th quarter. IFP Advisors Inc now owns 566 shares of the company's stock worth $117,000 after purchasing an additional 96 shares during the last quarter. 94.62% of the stock is currently owned by hedge funds and other institutional investors.

About AutoNation

AutoNation, Inc is a leading automotive retailer in the United States. The company sells new and used vehicles through a network of franchised dealerships and provides automotive services including vehicle financing, insurance products, maintenance, repair, parts, and collision-repair services.

In addition to its manufacturer-branded dealerships, AutoNation operates AutoNation USA locations focused primarily on used vehicles and offers digital tools that allow customers to research, purchase, finance, and service vehicles online.

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