JPMorgan downgrades CarGurus with tariffs ‘unequivocally negative’

JPMorgan downgraded CarGurus (CARG) to Neutral from Overweight with a price target of $34, down from $42. The implementation of 25% tariffs on all imported automobiles, in addition to imported parts over time, is “unequivocally negative” for the auto retail ecosystem in the near- and medium-term, the analyst tells investors in a research note. The firm says 50% of vehicles sold in the U.S. are imported. Assuming these costs are passed on the consumers, it is likely to result in $4,000-$5,300, or a 9%-12%, average increase in prices, contends JPMorgan. It downgraded CarGurus to Neutral, arguing the backdrop is likely to slowdown the company’s potential for pricing tailwinds in the near to medium-term.