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On Thursday, Jefferies analyst Bret Jordan adjusted the price target on Lithia Motors (NYSE:LAD) stock, reducing it to $400 from the previous figure of $465. Despite this change, the firm continues to endorse a Buy rating for the automotive retailer. Currently trading at $278.29, the stock has declined 22% year-to-date, though InvestingPro analysis suggests the stock is fairly valued at current levels. The revision followed Lithia Motors’ first-quarter earnings report, which disclosed an adjusted earnings per share (EPS) of $7.66, slightly below the consensus estimate of $7.81. The shortfall was attributed to a $0.27 charge related to Pinewood and a marginal decline of 0.4% in used vehicle supply. With a P/E ratio of 9.31 and revenue growth of 12.79% over the last twelve months, InvestingPro data reveals the company maintains strong fundamentals despite recent challenges.
The company’s performance in new vehicle gross profit per unit (GPU) was stronger than anticipated, coming in at $3,046 compared to the estimated $2,889, alongside a positive volume recovery of 3.6%. Management at Lithia Motors reaffirmed their outlook for 2025, projecting mid-single-digit percentage growth in new unit sales despite the potential impact of a 25% auto tariff. They highlighted that approximately 45% of the company’s inventory would not be affected by the tariffs and expressed confidence in achieving an "above consensus" 16-17 million Seasonally Adjusted Annual Rate (SAAR) for 2025.
Jordan’s commentary pointed out that while there is a risk to volume contingent on the extent and persistence of tariffs, the anticipated strong demand for parts and service (P&S) is expected to help mitigate any negative effects on the company’s performance. The analyst’s outlook suggests that despite the headwinds faced by the automotive industry, including tariffs and supply challenges, there are still positive factors at play that could support Lithia Motors’ growth and profitability in the coming years.
In other recent news, Lithia Motors Inc . reported its first-quarter 2025 earnings, revealing a performance that exceeded analyst expectations. The company achieved an adjusted earnings per share (EPS) of $7.66, surpassing the forecast of $7.61, with total revenues reaching $9.2 billion, slightly above the anticipated $9.18 billion. Despite this earnings beat, the stock price experienced a decline, reflecting broader market concerns. The company’s revenue saw a 7% increase year-over-year, while adjusted EPS rose by 25.4%. Lithia Motors continues to focus on expanding its digital retail strategies and omnichannel ecosystem, which contributed to its growth. New vehicle unit sales increased by 3.6% compared to the previous year, although there was a slight decline in gross profit per unit. The company is also targeting $2 EPS per $1 billion in revenue and plans to acquire $2 billion in revenues in 2025. Additionally, Lithia Motors aims to balance capital allocation between acquisitions and share buybacks, as indicated by its recent share repurchase activities.
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