UPDATE: J.P. Morgan Color On AN 4Q

J.P. Morgan, which raised its PT on shares of AutoNation, Inc. (NYSE: AN), is providing some color on the stock.

“We revise our 2011 and 2012 EPS estimates to $1.90 (vs. $1.65 earlier) and $2.20 (vs. $1.85 earlier), respectively, after the company reported 4Q:10 EPS of $0.45, notably ahead of JPMe ($0.31) as stronger than expected revenues were partially offset by lower than expected overall gross margins,” J.P. Morgan writes.

“Further, it was encouraging to note that of the four publicly listed dealers (AN, GPI, PAG, and SAH) that have reported 4Q earnings thus far, AN stood out as the only one not having seen gross margin compression in its new vehicle business in the quarter.

“Meanwhile, we also introduce 2011 quarterly EPS cadence of $0.44, $0.52, $0.49, and $0.45. Dec-2011 price target is revised higher to $29 from $24 (13x P/E on 2012e EPS of $2.20). We maintain our Neutral rating on the stock primarily on valuation, and believe that the risk/reward is greater for OEMs and auto suppliers at this stage in the cycle given their 100% exposure to cyclical rebound in vehicle production.”

AutoNation, Inc. closed Tuesday at $33.50.