J.P. Morgan turned constructive on Sonic Automotive ( NYSE: SAH ) with an upgrade to an Overweight rating from Neutral.
Analyst Rajat Gupta and team note that while Sonic Automotive ( SAH ) was one of the best performers in the firm's coverage universe in the prior downturn, execution for this cycle has been sluggish so far.
"We have increased comfort around sustained execution in the franchise business, and while L-T profit potential of EchoPark is compelling, sustained execution on profitability is needed. With visibility on recent EchoPark losses (driven by wholesale pricing surge in 2020/2021) fading improving, coupled with sustained cost productivity supporting normalized earnings levels significantly higher than pre-COVID level, shares screen attractively valued at current levels."
A December 2023 price target of $60 was set on SAH , which works out to a 8.4x multiple on the 2024E EPS estimate.
Shares of Sonic Automotive ( SAH ) jumped 2.52% in premarket trading on Thursday.
The Seeking Alpha Quant Rating on SAH is also flashing Buy .
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Sonic Automotive trades higher after J.P. Morgan upgrades to a buy rating