UBS Reiterates a 'Sell' on AutoNation (AN); Low Quality Beat as Margins Decline and Share Repurchase Unsustainable

UBS reiterates a 'Sell' on AutoNation Inc. (NYSE: AN) price target raised $2 to $32.

UBS analyst says, "Q4 EPS of $0.51 (ex $0.01 debt refi) was a low quality beat as share repurchases accounted for the entire $0.02 beat. Despite the company’s bullish 2012 sales outlook (14m vs UBSe 13.3m), we remain concerned about margin deterioration as new, used, and P&S margins were down q/q and y/y. We reiterate our Sell rating in light of our negative outlook for margins, unsustainable share repurchases, and AN’s premium valuation (currently 15x vs. historical average of 12x)."

"We are revising our 2012 estimate from $2.00 to $2.10 and increasing our 2013 EPS estimate from $2.20 to $2.35."

For an analyst ratings summary and ratings history on AutoNation Inc. click here. For more ratings news on AutoNation Inc. click here.

Shares of AutoNation Inc. closed at $36.82 yesterday.

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