Citi raises Lithia Motors stock target to $378, maintains Buy rating
Investing.com
Published May 22, 2025 11:19AM ET
On Thursday, Citi analyst Ronald Josey adjusted the price target for Lithia Motors (NYSE:LAD) stock, increasing it slightly to $378.00 from the previous $375.00, while reaffirming a Buy rating on the company's shares. According to InvestingPro analysis, the stock appears fairly valued at current levels, with analyst targets ranging from $305 to $465. The adjustment comes after an assessment of the auto dealer's financial resilience and market position.
Josey highlighted that auto dealers like Lithia Motors are less impacted by higher tariffs compared to other sectors within the automotive industry or broader retail market. The company generated $36.8 billion in revenue over the last twelve months, with a gross profit margin of 15.4%. In 2024, the sale of new vehicles contributed to 22% of Lithia Motors' gross profit, and a significant portion of their revenue—25%—originates from operations in the United Kingdom, which remains unaffected by U.S. tariffs.
The company's first-quarter performance met analysts' expectations, and Josey anticipates that Lithia Motors will show improved performance in the coming years. With a P/E ratio of 9.7 and revenue growth of 12.8% over the last twelve months, despite potential challenges from tariff headwinds in the latter half of the year, projections for 2025 and 2026 are optimistic.
Lithia Motors is expected to generate approximately $1 billion in surplus cash annually. This financial strength is poised to support further growth investments and provide cash returns to shareholders. The upward revision of the price target to $378 is also reflective of anticipated higher-than-expected share repurchase activities.
Josey's comments underscore a positive outlook for Lithia Motors, suggesting that the company is well-positioned to navigate through market challenges while continuing its growth trajectory and rewarding its shareholders.
In other recent news, Lithia Motors reported its first-quarter 2025 earnings, showing an adjusted earnings per share (EPS) of $7.66, slightly above the forecast of $7.61. The company also exceeded revenue expectations, posting $9.2 billion against the anticipated $9.18 billion. Despite these positive results, Jefferies analyst Bret Jordan lowered the price target for Lithia Motors from $465 to $400 while maintaining a Buy rating, citing a $0.27 charge related to Pinewood and a marginal decline in used vehicle supply as contributing factors. Shareholders recently approved several proposals, including the election of directors and an amendment to the company's stock incentive plan. The appointment of KPMG LLP as the independent registered public accounting firm was ratified. However, a shareholder proposal concerning executive severance arrangements was not approved. Lithia Motors' management reaffirmed its outlook for 2025, projecting growth in new unit sales despite potential tariff impacts. The company remains focused on expanding its digital retail strategies and optimizing its operations to drive growth.
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Written By: Investing.com
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