Penske Automotive Group, Inc: Risk Reward Update

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Penske Automotive Group, Inc: Risk Reward Update

UpdateM

RiskRisk RewardReward– Penske- AutomotivePenske Group,AutomotiveInc (PAG.N) Group, Inc (PAG.N)

Favorable Brand Exposure, High End Consumer, Insulated from BEV Stagnation

PRICE TARGET $190.00 OVERWEIGHT THESIS

Our $190 PT is based on a 6 year DCF, driven by a 3.9% 2026-2032 revenue CAGR with a ▪GPUs will continue to normalize but settle

4.7% FY26 EBITDA Margin. We assume a 1.8% terminal growth rate and 8.4% WACC. Base above 2019 levels

Case triangulated with PE multiple implies 13.9x $13.68 FY26 earnings. ▪Diversification strategy provides a hedge

against cyclical forces, strategic capital $186.70

allocation, luxury brand mix and high end

Consensus Price Target Distribution $160.00 $209.34 consumer exposure MS PT

Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates

Consensus Rating Distribution

58% Overweight

RISK REWARD CHART

42% Equal-weight

0% Underweight

USD MS Rating

$243.00$243.00(+38.70%)$243.00(+38.70%)(+38.70%)

Source: Refinitiv, Morgan Stanley Research

Risk Reward Themes

$190.00$190.00(+8.45%)$190.00(+8.45%)(+8.45%)

180 $175.20$175.20$175.20 Secular Growth: Negative

Self-help: Positive

View descriptions of Risk Rewards Themes here

$117.00$117.00(-33.22%)$117.00(-33.22%)(-33.22%)

JUN '25 DEC '25 JUN '26 JUN '27

Key: Historical Stock Performance Current Stock Price Price Target

BULL CASE $243.00 BASE CASE $190.00 BEAR CASE $117.00

Sustained higher margins MSD growth with margin stability Lower growth and margins

Our $243 Bull Case is driven by 20% higher Our $190 PT is based on a 6 year DCF, Our $117 Bear Case is driven by 12% lower

EPS vs. base case on a lower/no tariff driven by a 3.9% 2026-2032 revenue CAGR EPS vs. base case on a higher/sustained

scenario and a 14.8x multiple.