Asbury Automotive Group (ABG) PT Lowered to $230 at CFRA

CFRA analyst Garrett Nelson lowered the price target on Asbury Automotive Group (NYSE: ABG) to $230.00 (from $260.00) while maintaining a Hold rating.

The analyst comments "We lower our 12-month target price by $30 to $230, based on a '25 P/E of 8.0x, a justified discount to ABG's 10-year mean forward P/E of 9.4x. We lower our adjusted EPS estimates to $26.30 from $27.15 for '24 and to $28.65 from $30.00 for '25. ABG posted Q3 EPS of $6.35 vs. $8.12 (-25%), short of the $6.57 consensus. The miss was driven by weaker-than-expected sales and margins, as revenue rose 16% to $4.24B ($70M below consensus) and gross margin contracted 140 bps to 16.9% (20 bps below consensus). We maintain Hold on ABG due to valuation, seeing better opportunities across the auto retail space at current levels. However, we recently turned positive on the Auto Retail sub-industry, as we think auto sales and margins are likely to improve in the coming quarters in tandem with declining interest rates. U.S. new vehicle affordability recently improved to its best level in three years, and we think lower interest rates are likely to act as a tailwind after several quarters of rising inventories and rates."

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