AutoNation (AN.N): Model Update

Citi's Take: AutoNation provided cautious commentary regarding current industry and company performance for 3Q 2026. We reduced our 3Q and full-year 2026 earnings assumptions to reflect lower than expected new vehicle unit sales and gross margin along with a reduced CFS assumption. We lowered our 3Q estimate to $5.10 per share from $5.66 and our full-year 2026 estimate to $20.85 from $21.70. Our 2027 estimate of $25.80 and 2028 estimate of $28.10 are unchanged. We lowered our new and used vehicle unit assumptions, gross margin and finance and insurance contribution, and reduced Aftersales 3Q growth. US light vehicle sales were down 2.7% through August at 10.7 million units;