The grocers aren’t the only ones having a bad day. Take a look at the auto dealerships getting hammered on an analyst downgrade at Bank of America/Merrill — who is warning of a ‘looming tsunami’, lowering expectations and price target.
BofA/Merrill analyst John Murphy downgraded Lithia Motors to Underperform from Neutral and cut its price target to $92 from $106. The analyst lowered US sales and North American production forecasts saying year-to-date sales tracking down 2%, following a likely peak in 2016, and there is a “looming tsunami” of off-lease volumes that will hit the industry in 2018, further pressuring vehicle pricing. As a result, Murphy expects a quick and material downturn in the US auto cycle and lowered estimates across the industry. For Lithia Motors, the analyst said benefits from diversification efforts and leverage is reflected in valuation.
The sector is down 6% for the day.