Penske Automotive price target lowered to $140 from $165 at JPMorgan

JPMorgan lowered the firm’s price target on Penske Automotive (PAG) to $140 from $165 and keeps an Underweight rating on the shares. The implementation of 25% tariffs on all imported automobiles, in addition to imported parts over time, is “unequivocally negative” for the auto retail ecosystem in the near- and medium-term, the analyst tells investors in a research note. The firm says 50% of vehicles sold in the U.S. are imported. Assuming these costs are passed on the consumers, it is likely to result in $4,000-$5,300, or a 9%-12%, average increase in prices, contends JPMorgan. The firm also believes the “steep and broad-based” tariffs are likely to cause supply chain disruptions globally. JPMorgan reduced price targets for the marketplaces, sees used car dealers benefiting in the near-term, and thinks franchise dealers will be less impacted in the medium-term.