Bank of America (BAC) Likes AutoNation (AN), Group 1 Automotive (GPI), Penske Automotive (PAG)

Bank of America (NYSE:BAC) said today it likes the auto dealer sector, including companies like AutoNation (NYSE:AN), Group 1 Automotive (NYSE:GPI) and Penske Automotive (NYSE:PAG).

Christopher Dietrich at Dow Jones said: “BAML upped its view on auto-dealer stocks and ups price targets for a raft of stocks including AutoNation, Group 1 Automotive and Penske Automotive. BAML says strengthening balance sheets across the sector mean companies are likely to return value to shareholders with buybacks and higher dividends.

“BAML’s estimate for 15M light vehicle sales in 2011 are above the Street’s consensus, yet BAML asserts dealer stocks can still push higher even in a lighter sales environment on the basis of cost cutting made during the worst of the financial crisis.”

This contrasts with UBS’ recent dealer survey that found dealers fretting about a possible price war this year. UBS estimates 13 million light truck and car sales this year, well below the BAML number. UBS also has a sell rating on AutoNation.




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