Morgan Stanley analyst Paresh Jain said yesterday's weakness in Lithia Motors shares is an overreaction to conservative guidance and views it as a buying opportunity. Paresh said management's strategy to go for share gains comes at the expense of margins but higher volumes will help offset some pressures and also helps get manufacturer support which is key to acquisitions. Further, the analyst believes management did not want to be aggressive on guidance until there is more visibility into integration of recent acquisitions. Jain rates Lithia an Overweight with a $115 price target.

Guggenheim analyst Ronald Jewsikow lowered the firm's price target on Lithia & Driveway to $297 from $320 and keeps a Buy rating on the shares. The firm updated estimates for its auto supplier and auto dealer coverage ahead of Q1 results from the group.