Deutsche Bank upgrades Asbury Automotive (ABG) to Buy; Increased Confidence After Meeting W/Mgmt
ABG Hot Sheet
Rating Summary:2 Buy, 2 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 16 | Down: 7 | New: 23
Deutsche Bank upgrades Asbury Automotive (NYSE: ABG) from Hold to Buy. Price target to $14.50 from $13.50.
Deutsche analyst says, "After a recent meeting with management, and extensive modeling work, we have high confidence in our estimates for ABG. We also believe that there are significant structural changes going on within the company (aimed at addressing the company’s higher-than-peer operating cost structure), and within the industry, that are underappreciated, and which could lead to upside vs our model...Our FY10/11 est’s of $1.36 / $1.70 are maintained, but with incr’d confidence We believe that ABG can earn $1.70 in 2011, in a 14mm unit U.S. sales environment, even if used units remain 23% below the 2006 peak, parts & service remains 12.5% below the 2007 peak, and floorplan interest rates increase by 200bp’s versus current levels. This earnings level implies a 3.4% operating margin (higher than 3.2% peak in 2006 / 2007) and is underpinned by our belief that $75mm of ABG’s SG&A savings (vs early 2008 levels) are permanent, a $1.40 positive impact to EPS. We are fine-tuning our 4Q09 estimate to $0.21 from $0.24, based on some expected near-term weakness in the used vehicle market ,related to the end of Cash for Clunkers."
To see all the upgrades/downgrades on shares of ABG, visit our Analyst Ratings page.
Asbury Automotive Group, Inc. (Asbury) is an automotive retailer in the United States.
Deutsche analyst says, "After a recent meeting with management, and extensive modeling work, we have high confidence in our estimates for ABG. We also believe that there are significant structural changes going on within the company (aimed at addressing the company’s higher-than-peer operating cost structure), and within the industry, that are underappreciated, and which could lead to upside vs our model...Our FY10/11 est’s of $1.36 / $1.70 are maintained, but with incr’d confidence We believe that ABG can earn $1.70 in 2011, in a 14mm unit U.S. sales environment, even if used units remain 23% below the 2006 peak, parts & service remains 12.5% below the 2007 peak, and floorplan interest rates increase by 200bp’s versus current levels. This earnings level implies a 3.4% operating margin (higher than 3.2% peak in 2006 / 2007) and is underpinned by our belief that $75mm of ABG’s SG&A savings (vs early 2008 levels) are permanent, a $1.40 positive impact to EPS. We are fine-tuning our 4Q09 estimate to $0.21 from $0.24, based on some expected near-term weakness in the used vehicle market ,related to the end of Cash for Clunkers."
To see all the upgrades/downgrades on shares of ABG, visit our Analyst Ratings page.
Asbury Automotive Group, Inc. (Asbury) is an automotive retailer in the United States.
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