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Investing.com - Needham has reduced its price target on Sonic Auto (NYSE:SAH) to $90.00 from $95.00 while maintaining a Buy rating on the stock. Currently trading at $65.48, the company has demonstrated strong momentum with a 33% return over the past year, according to InvestingPro data.
The price target adjustment follows Sonic Auto’s third-quarter results, reflecting steady outperformance from the company’s franchise business offset by continued volatility at its EchoPark division amid a choppy used auto recovery. Despite market challenges, the company maintains a "GOOD" financial health score and has consistently maintained dividend payments for 16 consecutive years.
Needham’s revised $90 target is based on a $7.4 billion enterprise value calculation, with $6.8 billion attributed to Sonic’s franchise dealership business and $600 million for EchoPark.
The firm values Sonic’s franchise business at 7.5 times its fiscal year 2026 estimated adjusted EBITDA, representing a discount to Sonic’s franchise peer group, while EchoPark is valued at 10 times estimated FY26 adjusted EBITDA, down from 15 times previously.
Needham increased its sum-of-the-parts discount to 20% from 15% previously, citing EchoPark’s high-single-digit share of the combined enterprise value and near-term execution concerns.
In other recent news, Sonic Automotive Inc. reported its third-quarter 2025 earnings, revealing significant financial developments. The company posted an adjusted earnings per share (EPS) of $1.41, which did not meet the analysts’ forecast of $1.74. However, Sonic Automotive surpassed revenue expectations, generating $4 billion compared to the anticipated $3.62 billion. These figures highlight mixed financial results for the quarter, with a notable shortfall in EPS yet a strong performance in revenue. The market responded to the EPS miss with a decline in share value. These recent developments provide investors with critical insights into Sonic Automotive’s financial health.
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