.September 25, 2024 10:04 AM

Morgan Stanley analysts upgraded AutoNation (NYSE:AN) to Overweight from Equalweight, with a new price target of $200, up from $145. They praised CEO Mike Manley’s leadership and predicted that AutoNation’s gross profit per unit (GPUs) will normalize post-pandemic but stay above 2019 levels. EBITDA is expected to end the year higher than in 2019.

AutoNation’s stock is trading in line with the franchise dealer average. Analysts highlighted the company’s strong exposure to Japanese OEMs, especially Toyota, which makes up nearly 20% of sales. This positions AutoNation well for the recovery of supply and the growing demand for hybrids. Concerns about direct-to-consumer (DTC) electric vehicle disruption are less immediate as EV sales slow down, reducing the impact of this bear thesis.