Sonic Automotive ( NYSE: SAH ) fell sharply on Tuesday after JPMorgan dropped its rating on the auto retailer to Neutral from Overweight.
While analyst Rajat Gupta and team think Sonic's ( SAH ) Q4 results were strong off brand exposure and solid SG&A execution, the franchise SG&A/gross guidance for 2023 was called underwhelming in context of the gross profit per unit trajectory and significant uncertainty on EchoPark. It was also noted that buyback activity from Sonic has also slowed.
Valuation on SAH may look attractive at a 10% discount on a EV/EBITDA look, but JPMorgan thinks the catalysts needed to bridge the gap to peers will be elusive in the near-term.
JPMorgan lowered its price target on Sonic Automotive ( SAH ) to $55.
Shares of SAH were down 9.42% at 11:00 a.m. to $54.33 on Tuesday to erase the rally from the last three weeks.
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Sonic Automotive slides 9% after JPMorgan pulls bull rating