UPDATE: Bank of America Reiterates Buy Rating, Raises PT on Group 1 Automotive
In a report published Monday, Bank of America reiterated its Buy rating on Group 1 Automotive (NYSE: GPI), and slightly raised its price target from $79.00 to $79.50.
Bank of America noted, “By our estimates Group 1's announced acquisition of 18 dealerships in the Sao Paolo metro area should contribute about $0.05 in EPS in 2013, which is at the higher end of GPI's stated estimate of $0.03-$0.05. Although the acquisition potentially adds $650mm of annualized revenue, the deal will likely not close until on or around February 28th, so only 10 months of incremental earnings should be added to 2013 estimates. Also, GPI is partially funding the deal through the issuance of 1.45mm shares and $47.4mm of cash, which raises the share count, reduces interest income and offsets some of the accretion. As a result of these adjustments to our model, we are raising our EPS estimates for 2013 from $5.25 to $5.30, and 2014e from $5.80 to $5.90. We are also raising our price objective slightly from $79 to $79.50, which is based on 15X our revised 2013 EPS. As the SAAR continues to grow, we believe that the multiple for the dealer group on the whole will expand, as in previous cycles. GPI is currently trading at just 12.7X our 2013e EPS.”
Group 1 Automotive closed on Friday at $67.40.
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