Wachovia Downgrades Penske Automotive Group (PAG) to Market Perform
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Wachovia downgrades Penske Automotive Group, Inc. (NYSE: PAG) to Market Perform.
Wachovia analyst says, "Recent deterioration in the U.K. coupled with the likelihood that luxury sales will lag a broader U.S. industry recovery will likely lead to down earnings years in '08 and '09. Additionally, parts and service continues to slow, a negative given PAG's high luxury mix. We are lowering our '08 EPS estimate to $1.40 and our '09 EPS estimate to $1.15 ($1.30 ex-new FASB ruling on converts). Our '08 and '09 EPS estimates are 9% and 18% below consensus, respectively. We expect PAG's valuation premium to the group to stay relatively narrow over the next year. As such, we are lowering our valuation range to $13-$14. We believe downside is $10-$11."
Penske Automotive Group, Inc., formerly known as United Auto Group, Inc., is an automotive retailer.
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