Lithia & Driveway upgraded to Buy from Neutral at Citi

Citi upgraded Lithia & Driveway to Buy from Neutral with a price target of $375, down from $415. The firm expects the dealer group multiples to move back to historical levels when the tariffs are clarified and believes Lithia will trade in line with the group. When the “tariff fog clears,” underlying demographic trends in the U.S. should support trend demand of 16M-18M car units in 2025, or about 10% higher than the 2024 total, the analyst tells investors in a research note. Citi believes inventory levels will need to be replenished, providing a production tailwind. Both trends are positive for the financial performance of the auto sector. Auto dealers are less vulnerable to higher tariffs relative to the rest of the auto sector or other retailers, contends the firm. It believes Lithia’s “tariff bark” is “not as big as the bite.”