In a report released today, Chris Pierce from Needham reiterated a Buy rating on Sonic Automotive, with a price target of $95.00.
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Chris Pierce has given his Buy rating due to a combination of factors, including the robust potential of Sonic Automotive’s EchoPark segment and the resilience of its franchise business. The EchoPark division is generating significant interest from investors, thanks to its sustainable and profitable growth trajectory, which is expected to contribute increasingly to the company’s earnings as the used vehicle market improves.
Additionally, Sonic Automotive’s franchise business is perceived to be more insulated from market fluctuations compared to its peers, largely due to its strong relationships with premium OEMs. The valuation target of $95 is supported by an enterprise value of $7.3 billion, with $6.4 billion attributed to the franchise operations and $1 billion to EchoPark, applying respective multiples to their projected 2026 adjusted EBITDA, and factoring in a 15% sum-of-the-parts discount.
In another report released on July 25, Benchmark Co. also maintained a Buy rating on the stock with a $80.00 price target.