FTSE 100: Index falls as earnings results weigh; pound below $1.33, Bodycote soars
On Tuesday, Goldman Sachs analysts assumed coverage of Lithia Motors stock (NYSE: NYSE:LAD), a $8.17 billion market cap automotive retailer trading at a P/E of 9.88, with a Neutral rating and set a price target of $340. The analysts highlighted the uncertainty in near-term demand as a key factor in their assessment.
The analysts noted that the current risk/reward profile for Lithia Motors is balanced due to the range of possible outcomes, both positive and negative. According to InvestingPro data, seven analysts have recently revised their earnings downward for the upcoming period, though the company maintains strong revenue growth of 12.81%. They pointed out a potential for increased demand, estimating that up to 12 million vehicles may have been undersold over the past five years. Despite affordability challenges, new vehicle demand has remained resilient in recent years.
Goldman Sachs analysts also mentioned potential downside risks, where broader macroeconomic pressures could impact demand for vehicles. Based on InvestingPro’s Fair Value analysis, the stock appears fairly valued at current levels. This valuation alignment, combined with market uncertainties, contributed to their decision to assign a Neutral rating to the stock.
Lithia Motors, a prominent player in the automotive retail industry, continues to navigate the evolving market conditions. The company’s performance will likely be influenced by factors such as consumer demand and broader economic trends.
Investors and market participants will be closely monitoring Lithia Motors’ progress and any shifts in demand dynamics in the coming months.
In other recent news, Lithia Motors reported its first-quarter 2025 earnings, with an adjusted earnings per share (EPS) of $7.66, slightly surpassing the forecast of $7.61. The company also exceeded revenue expectations, reporting $9.2 billion against the anticipated $9.18 billion, marking a 7% increase from the previous year. Despite the positive earnings, Jefferies analyst Bret Jordan lowered the price target for Lithia Motors to $400, citing a minor shortfall in the EPS due to a charge related to Pinewood and a slight decline in used vehicle supply. However, Jordan maintained a Buy rating, noting the company’s strong performance in new vehicle gross profit per unit and positive volume recovery.
Additionally, Citi analyst Ronald Josey raised Lithia Motors’ stock target to $378, maintaining a Buy rating, reflecting optimism about the company’s financial resilience and market position. Josey noted that Lithia Motors is less affected by higher tariffs compared to other sectors and highlighted the company’s anticipated strong cash generation and share repurchase activities. At the 2025 Annual Meeting of Shareholders, Lithia Motors’ executive compensation and board nominees were approved, and an amendment to the company’s Stock Incentive Plan was passed to increase authorized shares.
Furthermore, Lithia Motors announced plans to focus on expanding digital retail strategies and enhancing its omnichannel ecosystem. The company is targeting $2 EPS per $1 billion in revenue and aims to acquire $2 billion in revenues in 2025. Analysts from Jefferies pointed out that strong demand for parts and services could mitigate potential tariff impacts on the company’s performance.
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