JPMorgan Downgrades Sonic Auto (SAH) to Underweight

JPMorgan analyst Rajat Gupta downgraded Sonic Auto (NYSE: SAH) from Overweight to Underweight with a price target of $72.00 (from $65.00).

The analyst comments: "While SAH was one of the best performers in our coverage universe in the prior downturn, execution this cycle until 2019 has been sluggish, with SAH’s financial metrics and earnings revision well below peers. EchoPark continues to manage a tough supply backdrop with GPUs resilient and tight control on SG&A. SAH has recently demonstrated the ability to decouple unit growth and profit trends from the broader used car market, though ability to maintain current strong performance in a choppy SAAR environment remains uncertain. Shares are now trading at a ~20% premium vs. peers on FY2 P/E vs. historical ~10% discount, which coupled with above-average balance sheet leverage, makes the risk-reward unattractive at current levels and in the context of an unfavorable broader industry/macro environment."

For an analyst ratings summary and ratings history on Sonic Auto click here. For more ratings news on Sonic Auto click here.

Shares of Sonic Auto closed at $85.17 yesterday.

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