Automotive retailer Lithia Motors (LAD) has acquired Toronto-based Pfaff Automotive Partners to expand into Canada. This is Lithia’s first international acquisition. The company’s shares closed 1.2% higher at $331.30 on Tuesday.
Headquartered in Oregon, Lithia is involved in the operation of automotive franchises and retail of used and new vehicles. Pfaff is engaged in the retail of automobiles and accessories. It offers new and used vans, passenger cars and SUVs, along with automotive parts distribution, maintenance and finance services.
Through the acquisition, Lithia expects to generate annual revenues of more than $1 billion from Pfaff’s 11 locations in the Greater Toronto area, Vancouver and Calgary. (See Lithia stock chart on TipRanks)
The President and CEO of Lithia, Bryan DeBoer, said, “Beyond its size, Pfaff has an excellent management team, and its locations provide an ideal hub for further expansion. Pfaff offers a customer-friendly experience with its best price first approach and captive in-house leasing option. This simple, transparent experience perfectly aligns with our technology-enabled online offerings.”
On July 26, Morgan Stanley analyst Adam Jonas maintained a Sell rating on the stock with a price target of $335 (1.1% upside potential). The analyst expects the company to report earnings per share (EPS) of $10.02 in the third quarter.
Overall, the stock has a Moderate Buy consensus rating based on 4 Buys and 1 Sell. The average Lithia Motors price target of $450.40 implies nearly 36% upside potential. The company’s shares have gained 28.3% over the past year.
According to TipRanks’ Smart Score rating system, Lithia scores a 9 out of 10, suggesting that the stock is likely to outperform market averages.
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