Ferrari, Asbury Automotive, And AutoNation Touted As Top Picks for 2024 By BofA: Luxury Status And Strong Free Cash Flow Drive Growth
Portfolio Pulse from Shivani Kumaresan
BofA Securities analyst John Murphy selected Ferrari NV (RACE), Asbury Automotive Group Inc (ABG), and AutoNation Inc (AN) as top picks for 2024, citing luxury status, strong free cash flow, and a favorable position in the auto industry. The industry is expected to benefit from volume recovery and a new cycle in North America. Ferrari is praised for its brand value and luxury status, Asbury for its improved business structure and acquisition strategy, and AutoNation for its ability to maintain strong SG&A leverage. Key auto industry themes for 2024 include North American volume growth, EV market dichotomy, the impact of the U.S. election on clean vehicle transition, benefits from lower raw materials and transportation costs, and solid auto credit market despite rising delinquencies.
January 09, 2024 | 7:50 pm
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POSITIVE IMPACT
Asbury Automotive Group Inc receives a Buy rating from BofA. The company's strong free cash flow enables acquisitions and buybacks, with the recent $3 billion Koons deal expected to yield earnings upside.
Asbury's improved business structure post-pandemic and its ability to leverage acquisitions and buybacks for earnings growth are likely to be viewed positively by investors, potentially leading to a rise in the stock price.
CONFIDENCE 75
IMPORTANCE 80
RELEVANCE 85
POSITIVE IMPACT
AutoNation Inc is favored by BofA with a Buy rating. Despite concerns over New Vehicle GPU declines, the analyst expects the company to maintain strong SG&A leverage, which was better than pre-pandemic levels.
AutoNation's ability to maintain strong SG&A leverage despite potential declines in New Vehicle GPUs is a positive sign for investors, suggesting the company can manage costs effectively, which may lead to stock price growth.
CONFIDENCE 70
IMPORTANCE 75
RELEVANCE 80
POSITIVE IMPACT
Ferrari NV is highlighted for its luxury status and significant brand value, with a Buy rating from BofA. The company's strategy of controlled volume growth and new model introductions is expected to drive consistent revenue and earnings growth.
Ferrari's luxury status and brand value are significant factors that can attract investors, and the company's growth strategy is likely to result in positive financial performance, which could lead to stock appreciation.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 90