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Sonic Automotive Downgraded to Equal-Weight by Stephens & Co., PT Raised to $82
ByAinvest
Thursday, Jul 17, 2025 7:48 am ET1min read
Sonic Automotive Downgraded to Equal-Weight by Stephens & Co., PT Raised to $82
Sonic Automotive (SAH) has experienced a significant shift in its investment rating, as Stephens & Co. downgraded the stock from an Overweight to an Equal Weight rating. The investment firm also increased its price target for Sonic from $72 to $82. This move was driven by adjustments to the company's valuation, as Stephens can no longer support a 12-month price target high enough to maintain its Overweight rating based on current earnings projections [1].Despite the downgrade, Stephens acknowledged that the second quarter was generally positive for Sonic and its group of similar dealers. The overall sentiment among analysts remains positive, with an average target price of $70.71 and a consensus recommendation of "Outperform" from 9 brokerage firms [1].
The downgrade comes amidst a broader trend of sector-wide challenges in the U.S. auto retail sector. JPMorgan, in a recent report, issued downgrades for Sonic, Asbury Automotive Group, and Group 1 Automotive, while upgrading Cars.com. The firm noted that the sector's risk-reward profile is negative due to outperformance despite weakening fundamentals [2].
Morningstar has also recently raised its fair value estimate for Sonic Automotive by 37%, citing a lower risk profile. The company operates 108 franchised stores in 18 states, with a significant presence in California, Texas, and the Southeast. Its revenue streams include new and used vehicles, parts, collision repair, finance, insurance, and wholesale auctions [3].
The financial landscape for Sonic Automotive remains complex, with challenges such as potential affordability headwinds and exposure to tariff-impacted brands. However, the company's strong franchise execution and EchoPark's profitable growth offer some optimism. Investors should closely monitor the company's performance and the broader sector dynamics.
References:
[1] https://www.gurufocus.com/news/2983652/sonic-automotive-sah-downgraded-by-stephens-amid-valuation-adjustments-sah-stock-news
[2] https://seekingalpha.com/news/4468303/us-auto-retail-sonic-asbury-and-group-1-see-downgrades-at-jpmorgan-carscom-is-upgraded
[3] https://finance.yahoo.com/research/reports/MS_0P0000050L_AnalystReport_1752707448000?ncid=yahooproperties_plusresear_nm5q6ze1cei&yptr=yahoo
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