MEDFORD, OR – Lithia Motors Inc . (NYSE:LAD), a leading automotive retailer, announced Monday that it has experienced disruptions in its dealership operations due to a cybersecurity incident at CDK Global (NASDAQ:CDK), a third-party service provider. The incident, which occurred on June 19, 2024, led to the suspension of systems that support dealership functions such as sales, customer relationship management, inventory, and accounting.
Upon receiving notice from CDK, Lithia Motors activated its cyber incident response procedures, which included precautionary containment measures and severing connections between its systems and CDK's. While the company has not discovered any compromise or unauthorized access to its systems or networks, it acknowledged that the suspension of CDK's services has negatively affected its business operations.
The dealerships of Lithia Motors continue to operate, employing mitigation strategies to minimize customer service disruptions. However, the company has yet to determine if the incident will have a material impact on its financial condition or results of operations. Lithia Motors is in the process of investigating the incident alongside CDK.
This report is based on the preliminary information available and may change as the investigation progresses. Lithia Motors has not provided a timeline for the full restoration of the affected dealer management systems.
The details of this event are derived from a recent SEC 8-K filing by Lithia Motors, Inc.
In other recent news, Lithia & Driveway has been making notable strides in its financial operations. The company recently expanded its share repurchase plan by an additional $350 million, a decision that elevates the total repurchase authorization to approximately $660 million. This move is a testament to the company's confidence in its long-term growth and profitability, as stated by the company's President and CEO, Bryan DeBoer.
Moreover, Lithia & Driveway reported a 23% increase in revenues, reaching $8.6 billion for the first quarter of 2024. Despite a slight decline in new gross profit per unit, the company remains committed to operational performance and market share expansion.
Several analyst firms have revised their outlook on Lithia Motors. Evercore ISI reduced the company's stock price target to $360, citing earnings drag from Pendragon GPUs and increased expenses. Craig-Hallum also adjusted the company's price target to $310 due to first-quarter results impacted by operational challenges. Jefferies maintained a Buy rating but lowered the price target to $325 following a first-quarter adjusted earnings per share of $6.11, which fell short of the consensus estimate.
These recent developments emphasize Lithia & Driveway's ongoing financial and operational evolution.
InvestingPro Insights
Lithia Motors Inc. (NYSE:LAD) has shown resilience despite the recent cybersecurity incident affecting its dealership operations. According to real-time data from InvestingPro, the company boasts a robust market capitalization of $6.82 billion and is trading at an attractive earnings multiple of 7.28, with an adjusted P/E ratio over the last twelve months as of Q1 2024 at 6.99. These metrics suggest a company that is potentially undervalued, particularly when considering that Lithia Motors has raised its dividend for 10 consecutive years, signaling confidence in its financial health and commitment to returning value to shareholders.
The company's revenue growth also remains strong, with a 14.67% increase in the last twelve months as of Q1 2024, and an even more impressive quarterly revenue growth of 22.77% in Q1 2024. This performance is critical as it navigates through the operational challenges posed by the cybersecurity incident. Additionally, Lithia Motors is a prominent player in the Specialty Retail industry, which may provide a competitive edge as it works to mitigate the impact of the incident on its business.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available, including insights on the company's dividend sustainability and stock price volatility. To explore these further, visit https://www.investing.com/pro/LAD and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 11 more tips waiting that could guide investment decisions post-incident.
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