AutoNation Mkt Stuck in Reverse

AutoNation, Inc. (AN - Analyst Report) is the largest automotive retailer in the U.S. and is about twice the size of its nearest competitor. As of September 2008, the company owned and operated 311 new vehicle franchises from 238 dealerships located in major metropolitan markets in 16 states.

We expect AutoNation to be hurt by a continuing weak new car market. The company is disproportionately exposed to Florida and California, states that will be hit the most by a slowing car market. AutoNation's higher debts and interest charges are also major causes of concern.

Tight credit and a slumping U.S. demand are expected to continue to affect sales and thereby margins in the near term. As a result, we rate the shares a SELL with a target of $6.00.

Read the full analyst report on AN