Citi Starts Group 1 Automotive Inc. (GPI) at Buy

Citi analyst Michael Ward initiates coverage on Group 1 Automotive Inc. (NYSE: GPI) with a Buy rating and a price target of $463.00.

The analyst comments "Auto dealers are less vulnerable to higher tariffs relative to the rest of the auto sector or other retailers. GPI outperformed the S&P 500 in each of the last four years and was flat heading into the tariff crises. Gross profit selling new vehicles in the US accounted for 18% of GPI’s total gross in 2024. A tariff-related price increase for about one-half the market could have an adverse impact on demand until supply is balanced more efficiently, but in the near-term, used vehicle prices will likely move higher (10% of company gross) and demand for service will likely increase (42% of gross). UK market unaffected by the tariffs and could provide upside. In 2025, an estimated 25% of GPI revenue could come from operations in the UK, a market unaffected by the US tariff plans. UK registrations improved 3% in 2025, the second consecutive annual increase, but the total was 19% below the 2015-19 average and totals over the last six years have been below all others in the last 25 years. Group valuation multiples to be re-rated. Dealer stocks are valued at a 15% discount to pre-Covid levels despite better-than-expected financial performance during and after the crises. Profit levels have improved, and consolidation has accelerated, providing an opportunity for double-digit revenue growth at GPI in 2025-26. We expect Dealer Group multiples to move back to historical levels when the tariffs are clarified and believe GPI will trade in line with the Group. Our estimates are in line with the street. Our $463 price target uses the midpoint of our multiple range and averages EV/EBITDA and P/E metrics."

For an analyst ratings summary and ratings history on Group 1 Automotive Inc. click here. For more ratings news on Group 1 Automotive Inc. click here.

Shares of Group 1 Automotive Inc. closed at $401.83 yesterday.

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