Wells Fargo analyst Colin Langan downgraded AutoNation to Equal Weight from Overweight with a price target of $126, up from $115. Going into 2023, the analyst expects new gross margins to begin to fall from current record highs back to their long-term averages. In addition, he’s increasingly concerned that gross margins will also normalize in both AutoNation’s used and F&I segments, which also are at record highs. This is consistent with the view that pricing will fall as auto production supply chain issues ease, Langan tells investors in a research note. He says the stock’s current valuation levels are reasonable while 2023 consensus estimates are "presently too high."
Published first on TheFly
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