Citi Starts Sonic Auto (SAH) at Neutral

Citi analyst Michael Ward initiates coverage on Sonic Auto (NYSE: SAH) with a Neutral rating and a price target of $64.00.

The analyst comments "SAH is the smallest of the six public dealers but has the highest exposure to BMW and Mercedes (40% of new vehicle brand mix). Historically, the German luxury mix has been positive for performance, but 48% of unit sales from the two companies were imported in 2024 and could be subject to significant price increases. Gross Profit selling new vehicles at retail in 2024 amounted to 18% of total company gross profit, the second lowest of the Comp Group, and F&I accounted for 32% of company gross profit, the highest of the Group. SAH, like the other auto retailers, has less exposure to the tariffs than current market perception, but mix will likely remain an overhang until the talks are resolved. Restructuring actions at EchoPark, the stand alone used vehicle operations at SAH, could benefit from the higher tariffs, which could lead to increased demand for used vehicles. We expect Dealer Group multiples to move back to historical levels when the tariffs are clarified and believe SAH will trade in line with the Group. Our estimates are 10% below the street. Our $64 price target uses the low end of our multiple range and averages EV/EBITDA and P/E metrics."

For an analyst ratings summary and ratings history on Sonic Auto click here. For more ratings news on Sonic Auto click here.

Shares of Sonic Auto closed at $59.75 yesterday.

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