Lithia Motors Downgraded by Bank of America Corp. to “Neutral” (LAD)

Lithia Motors (NYSE:LAD) was downgraded by Bank of America Corp. from a “buy” rating to a “neutral” rating in a research note issued on Monday, Analyst Ratings reports. They currently have a $70.00 target price on the stock, up from their previous target price of $66.00. Bank of America Corp.’s target price points to a potential upside of 2.87% from the stock’s previous close.

The analysts wrote, “2Q13 was once again a solid quarter for the public auto dealers, and Lithia in particular, and we are seeing signs of improving growth in the Parts & Service segment which should be a tailwind for the next several years. Hence, we are raising our 2014e EPS from $4.40 to $4.65 and 2015 from $4.85 to $5.15. As a result of our higher estimates, we are raising our price target on LAD from $66 to $70, which is still based on a P/E of 15x our 2014 estimate. Although we are raising our estimates and price target, the stock’s almost 80% year-to-date appreciation appears to be pricing in our optimistic growth assumptions. At ~$68, LAD is currently trading at a P/E of about 14.6x on our revised 2014 estimate and is trading at a premium to its peer group. Therefore we are downgrading the stock from Buy to Neutral based on valuation. Although we remain optimistic about the near and long-term growth potential of the dealer business model, we see relatively more upside potential in some of the other stocks in our coverage universe.”

Lithia Motors (NYSE:LAD) traded down 0.78% on Monday, hitting $67.52. Lithia Motors has a 52-week low of $27.80 and a 52-week high of $68.12. The stock’s 50-day moving average is currently $59.5. The company has a market cap of $1.745 billion and a price-to-earnings ratio of 19.36.

Lithia Motors (NYSE:LAD) last issued its quarterly earnings data on Wednesday, July 24th. The company reported $1.05 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.90 by $0.15. The company had revenue of $1,000.00 million for the quarter, compared to the consensus estimate of $975.81 million. During the same quarter in the previous year, the company posted $0.76 earnings per share. The company’s revenue for the quarter was up 22.6% on a year-over-year basis. Analysts expect that Lithia Motors will post $3.89 EPS for the current fiscal year.

Several other analysts have also recently commented on the stock. Analysts at Morgan Stanley set a $70.00 price target on shares of Lithia Motors in a research note to investors on Tuesday, August 6th. They now have an “overweight” rating on the stock. Separately, analysts at Credit Suisse raised their price target on shares of Lithia Motors from $60.00 to $70.00 in a research note to investors on Thursday, July 25th. They now have an “outperform” rating on the stock. Finally, analysts at BB&T Corp. raised their price target on shares of Lithia Motors to $70.00 in a research note to investors on Thursday, July 25th. They now have a “buy” rating on the stock.

Two investment analysts have rated the stock with a hold rating and five have issued a buy rating to the stock. Lithia Motors currently has an average rating of “Buy” and an average target price of $64.90.

The company also recently announced a quarterly dividend, which is scheduled for Friday, August 23rd. Stockholders of record on Friday, August 9th will be paid a dividend of $0.13 per share. This represents a $0.52 annualized dividend and a dividend yield of 0.76%. The ex-dividend date is Wednesday, August 7th.

Lithia Motors, Inc, is an operator of automotive franchises and a retailer of new and used vehicles and services.

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