Why AutoNation Stock Is Still Revving Up

AutoNation, Inc. (NYSE: AN) reported its first-quarter earnings ahead of estimates, with the auto industry recovering faster than expected from the COVID-19 pandemic impact, according to Benchmark.

The AutoNation Analyst: Michael Ward upgraded the rating for AutoNation from Hold to Buy, while establishing a price target of $120.

The AutoNation Thesis: Although the stock has jumped fourfold from the pandemic-led lows in 2020, there seems to be a further upside, Ward said in the upgrade note.

AutoNation has benefited from “an acceleration in U.S. new and used vehicle demand, positive pricing, and cost improvement,” he noted.

With the industry recovering faster than expected and production not ramping up as fast, inventory additions have been limited, the analyst said. “Tight supplies have resulted in an improved turnover, a positive shift in mix, and better pricing in both the new and used markets, leading to record finance performance,” he added.

Ward expects this positive momentum to continue through 2021 and into 2022.

AN Price Action: Shares of AutoNation had risen by 1.75% to $97.16 at the time of publication Thursday.

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