Lutoff-Perlo Lisa sold $198K of AN

Morgan Stanley downgraded AutoNation (AN) and Group 1 (GPI) due to earnings revisions, higher rates, and industry challenges. AN was cut to Equal-weight with a $175 target, while GPI was lowered to Underweight with a $232 target. The bank cited declining new-vehicle profits, service growth moderation, and macroeconomic pressures. Morgan Stanley also reduced EPS estimates and price targets for franchise dealers, expecting further downward revisions as Q3 results are reported.

Morgan Stanley downgraded AutoNation (AN) to Equalweight from Overweight, lowering its price target to $175 from $250. The move follows AutoNation's reduced Q3 guidance, citing downside risk to earnings. The stock has fallen 21% year-to-date. Morgan Stanley cut its EPS estimates for Q3 and 2027, now below consensus. AutoNation's Q2 earnings beat estimates, but revenue missed expectations. The company has maintained six consecutive quarters of year-over-year earnings growth.

AutoNation (AN) stock fell 3.7% to $168.44, a 52-week low, after management warned of softer service growth, lower vehicle margins, and Q3 profit pressure. CFO Thomas Szlosek noted AutoNation Finance's $3B portfolio but acknowledged concerns. The stock trades below key moving averages, with a P/E of 8.24 and price targets between $210-$300. Share buybacks continue, but sentiment is fragile due to Q3 outlook and macro pressures like Fed rate hikes and rising bond yields.

AutoNation shares dropped 9% after reporting slower service growth, affordability challenges, and reduced EV demand at a Morgan Stanley event. The stock has fallen for three consecutive sessions.

AutoNation (AN) reported Q2 2026 adjusted diluted EPS of $5.56, up 2% year over year, with total revenue of $6.93 billion, essentially flat. After-sales gross profit was a record $607 million, and Customer Financial Services profitability rose to $2,800 per vehicle. ANF net income increased to $11 million and the portfolio grew to $2.67 billion. The company repurchased $457 million of shares and acquired four stores.

AutoNation CEO Mike Manley said improving consumer sentiment and bank data show 20% higher loan applications and originations, with delinquencies improving. AutoNation reported Q2 revenue down 1% YoY and declines in same-store revenue, gross profit, and new and used unit sales. The company cited tariff pull-ahead and BEV subsidy effects, with BEV sales down over 30% YoY, and expects stabilization in H2.