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Investing.com - Evercore ISI raised its price target on Advance Auto Parts (NYSE:AAP) to $60 from $58 while maintaining an "In Line" rating following the auto parts retailer’s recent quarterly results. According to InvestingPro data, the stock has shown strong momentum with a 20% gain over the past six months, despite trading at a high EBITDA multiple of 23.7x.
The firm noted positive developments in AAP’s professional installer (DIFM) segment, which showed low-single-digit comparable sales growth with acceleration in the final four weeks of the quarter, suggesting momentum heading into Q3.
Evercore ISI highlighted the company’s recent $1.95 billion senior notes issuance as "costly but necessary" given AAP’s non-investment grade credit standing and recent rating agency downgrade, though it will create an incremental 30-cent EPS headwind in 2025 that will carry into 2026.
Despite the quarterly results, the research firm pointed out that AAP continues to lose market share with comparable sales below 1%, while competitors AutoZone and O’Reilly Automotive are posting 3-4% comparable sales growth.
Year-to-date, AAP has reported negative cash flow of $201 million as it works through store optimization initiatives, while gross margin improvements are being partially offset by previously capitalized inventory costs, a trend likely to continue into the second half of the year.
In other recent news, Advance Auto Parts reported its second-quarter 2025 earnings with an adjusted diluted earnings per share (EPS) of $0.69, exceeding the analysts’ forecast of $0.53. This result marked a 30.19% surprise, indicating better-than-expected performance. The company’s revenue reached $2 billion, slightly above the anticipated $1.97 billion, though it represents an 8% decline compared to the previous year, highlighting ongoing market challenges. In addition to the earnings report, DA Davidson revised its price target for Advance Auto Parts to $63 from $65, maintaining a Neutral rating. The firm acknowledged the company’s early progress in its three-year turnaround plan, with several initiatives beginning to show positive results. These developments reflect Advance Auto Parts’ ongoing efforts to navigate a challenging market environment while working on long-term strategic improvements.
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