Lithia & Driveway downgraded to Neutral on lower confidence at JPMorgan

JPMorgan downgraded Lithia & Driveway to Neutral from Overweight with a price target of $295, down from $395. The analyst came away from the company’s Q3 results with diminished confidence in its differentiated earnings trajectory in the near-to medium-term. While the shares screen cheap from a valuation perspective and Lithia’s balance sheet leverage is amongst the lowest in the group, better visibility on the company’s return to pre-pandemic levels of same store gross profit growth outperformance is needed to drive a re-rating, the analyst tells investors in a research note.