AutoNation ( NYSE: AN ) fell in early trading on Tuesday after JPMorgan lowered its rating on the auto retailer to Underweight from Neutral.
While analyst Rajat Gupta and team said execution through the pandemic has been robust for AutoNation ( AN ) and management has used excess free cash flow, they see recent capital deployment having little accretion in the near-term as investments are expected to increase and buybacks will likely take a step back. The move to more M&A and related execution credibility is seen taking time to establish.
In terms of valuation, AutoNation ( AN ) shares are noted to trade at a ~5% premium on EV/EBITDA basis to make risk-reward less attractive at current levels.
Shares of AutoNation ( AN ) fell 2.09% in premarket action on Tuesday.
The Seeking Alpha Quant Rating on AutoNation is at Hold.
For further details see:
AutoNation trades lower after bear call from Bank of America