JPMorgan Downgrades Lithia Motors (LAD) to Neutral From Overweight - Here's Why

Lithia Motors, Inc. (NYSE:LAD) is one of the best transportation stocks to buy according to Wall Street analysts. On February 20, Lithia Motors, Inc. (NYSE:LAD) was downgraded to Neutral from Overweight by JPMorgan, with the firm bringing the price target on the stock down to $335 from $350. The firm told investors that the company’s visibility on execution remains a challenge, and that while Lithia Motors, Inc. (NYSE:LAD) exhibited strong same-store performance in fiscal Q4, it was more than offset by weaker-than-expected cost control. JPMorgan added that the company’s balance sheet leverage has now moved towards the higher-end of the target range.

Barclays also adjusted the price target on Lithia Motors, Inc. (NYSE:LAD) to $380 from $390 on February 17, maintaining an Overweight rating on the shares and telling investors that while the company’s fiscal Q4 results missed estimates, it still anticipates solid earnings growth in 2026.

Lithia Motors, Inc. (NYSE:LAD) reported its fiscal Q4 and full year 2025 results on February 11, reporting record full year revenues of $37.63 billion, up 4.0%, and record fourth quarter revenue of $9.20 billion. Full year diluted earnings per share rose 9.7%, while adjusted diluted earnings per share increased 15.7%.

Lithia Motors, Inc. (NYSE:LAD) operates as a global automotive retailer that offers a wide range of products and services throughout the vehicle ownership lifecycle. The company retails new and used vehicles and also offers other services, including captive finance solutions, comprehensive fleet management services, and other synergistic adjacencies. Its operations are divided into the Vehicle Operations and Financing Operations segments.

While we acknowledge the potential of LAD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.