Morgan Stanley analyst Armintas Sinkevicius double downgraded AutoNation (AN) and Sonic Automotive (SAH), each to Underweight from Overweight, as he took over coverage of the auto dealer stocks at the firm. Longer term, he is constructive on dealers, citing a belief that tech disruption could accelerate consolidation and set up a transition toward "megafleet managers." However, given that the market is over 9 years into the auto cycle, he sees limited potential for a re-rating of the multiples of auto dealer's stocks, Sinkevicius tells investors. In supporting his view, he notes that both stocks trade at a premium to the rest of the group. Sinkevicius also retains an Underweight rating on Group 1 Automotive (GPI) given its premium valuation.

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BofA upgraded Sonic Automotive to Buy from Underperform with a price target of $68, up from $55.

Notable companies reporting before tomorrow's open, with earnings consensus, include Exxon Mobil (XOM), consensus $2.20... Chevron (CVX), consensus $2.87... AbbVie (ABBV), consensus $2.23... HCA Healthcare (HCA), consensus $5.01... Colgate-Palmolive (CL), consensus 81c... Charter (CHTR), consensus $7.92... AutoNation (AN), consensus $4.27.

Sonic Automotive is up 11.4%, or $5.80 to $56.92.