FTSE 100: Index falls as earnings results weigh; pound below $1.33, Bodycote soars
Investing.com - DA Davidson raised its price target on Advance Auto Parts (NYSE:AAP) to $65.00 from $47.00 on Thursday, while maintaining a Neutral rating on the auto parts retailer. The stock has shown remarkable momentum, gaining nearly 39% over the past six months and currently trading near its 52-week high of $68.26.
The price target increase follows Advance Auto Parts’ preliminary second-quarter 2025 results, which the company pre-announced in conjunction with a $1.5 billion debt offering and a new ABL revolver to support its supply chain finance program. According to InvestingPro data, while the company wasn’t profitable in the last twelve months, analysts project a return to profitability this year with an EPS forecast of $1.98.
According to DA Davidson, the company’s quarterly performance was in line with or at the high end of its previous guidance and exceeded consensus estimates on both sales and margins as the retailer continues to make progress on its turnaround plan.
The new $65 price target is based on 16 times DA Davidson’s 2026 earnings per share estimate, which aligns with Advance Auto Parts’ five-year average multiple.
Despite the price target increase, DA Davidson maintained its Neutral rating on the stock, noting that the target adjustment reflects estimate increases driven by the second-quarter 2025 results.
In other recent news, Advance Auto Parts has experienced several notable developments. Moody’s Ratings downgraded the company’s corporate family rating to Ba3 from Ba1, citing increased debt levels due to a planned issuance of $1.5 billion in new senior unsecured notes. This move is expected to result in higher leverage and weaker interest coverage for fiscal years 2025 and 2026. Similarly, S&P Global Ratings downgraded Advance Auto Parts to ’BB’ from ’BB+’ because of elevated leverage and execution risks related to its multi-year turnaround plan.
On the other hand, TD Cowen raised its price target for the company to $62, maintaining a Hold rating, based on expectations for a slightly stronger EBIT margin in the third quarter. Mizuho (NYSE:MFG) also increased its price target to $44, citing better-than-expected first-quarter financial results as a reason for revising earnings estimates upward. Additionally, Redburn-Atlantic upgraded the company’s stock rating from sell to neutral and increased the price target to $45, anticipating a favorable second half of the year. These developments reflect a mix of cautious optimism and concern among analysts regarding Advance Auto Parts’ financial strategy and performance.
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