| Asbury Automotive (ABG) is up nearly 13% this morning following an upgrade at Deutsche Bank. Analyst Rod Lache upgraded shares to Buy from Hold and raised its target $1 to $14.50 from $13.50. After recently meeting with management, Lache said he has has confidence in the estimates for Asbury and that OEM restructurings and fewer dealers should be a positive for the company. In addition, he noted ongoing "significant structural changes" which look to address the company's high operating cost structure. Lache said that despite unprecedented unit sales declined, the cost reductions have enabled the company to maintain profitability, and appear to be "more permanent" than currently perceived by the market. Lache sees Q4 EPS 21c, based on some expected near-term weakness in the used vehicle market, but maintained his EPS forecast for FY10 of $1.36 and $1.70 for 2011. Even if used units remain $23% below the 3006 peak and parts & service remains 12.5% below the 2007 peak, he believes the auto retailer can earn $1.70 in 2011. Asbury Automotive shares are up $1.27, or 12.73%, to $11.25 in mid-morning trading. :theflyonthewall.com |
