Guggenheim Upgrades AutoNation To Buy

Guggenheim upgraded AutoNation to Buy from Hold, citing higher growth coming from its omni-channel offerings and investments. The analyst has reiterated a price target of $69 (21.5% upside potential).

In a research note on Aug. 12, Guggenheim analyst Ali Faghri said he is bullish on AutoNation (AN) as he sees upside earnings potential. The analyst sees room for stock appreciate “due to the company’s ability to extract value from omni-channel and its investments in Vroom and Waymo as well as potential earnings upside from capital deployment.” He has a $69 price target (21.5% upside potential) on the stock.

Last month, the new and used car retailer topped 2Q estimates driven by strong digital capabilities. Its earnings of $1.41 per share beat the consensus estimate of $0.37 per share and grew from the $1.20 per share in the year-earlier period. 2Q revenues fell 15.1% year-over-year to $4.53 billion, but exceeded Street estimates of $4 billion. The revenue decline was due to a 14% decline in same-store sales.

Following the 2Q results, JPMorgan analyst Rajat Gupta upgraded AutoNation to Buy on July 24 and the price target to $70 (23.3% upside potential) from $53. Gupta believes that the company is “uniquely positioned to participate and extract value from the move to omni-channel offerings in a fragmented space.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 3 Buys, 4 Holds, and 1 Sell. The average price target of $61.43 implies upside potential of about 8.2%. (See AN stock analysis on TipRanks).