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On Wednesday, Jefferies maintained a positive outlook on AutoZone (NYSE:AZO) shares, increasing the price target to $4,255 from the previous $4,000, while keeping a Buy rating on the stock. The adjustment follows AutoZone’s third-quarter earnings report, which disclosed earnings per share (EPS) of $35.36, falling short of the consensus estimate of $37.18. According to InvestingPro data, AutoZone currently trades at a P/E ratio of 24.1x, suggesting a premium valuation relative to its near-term earnings growth potential.
The firm’s analyst highlighted AutoZone’s performance, noting a 10.7% increase in the do-it-for-me (DIFM) segment’s market share and a healthy 3% growth in the do-it-yourself (DIY) sector, despite a challenging macroeconomic environment. Additionally, AutoZone’s operations in Mexico showed a robust 8.1% growth, excluding foreign exchange impacts. The company’s overall revenue growth stands at 4.7% over the last twelve months, with a solid gross profit margin of 53.1%.
However, the company faced headwinds due to foreign exchange rates, which negatively impacted earnings by 60 basis points, and last-in-first-out (LIFO) accounting effects, which reduced earnings by another 20 basis points. Looking ahead, the analyst pointed out that current foreign exchange trends suggest a potential $0.80 drag on fourth-quarter EPS.
Despite these challenges, Jefferies expressed confidence in AutoZone’s ongoing momentum into the fourth quarter. The company’s strategy to expand its market share in the highly fragmented DIFM sector, which currently stands at approximately 5%, was noted as a key factor. AutoZone’s efforts to enhance its megahub rollout and improve parts availability and delivery were also cited as important contributors to its continued success in the market. InvestingPro analysis reveals the company maintains a strong financial health score, with particularly high marks in profitability and price momentum. Discover more insights and 8 additional ProTips about AutoZone through InvestingPro’s comprehensive research platform.
In other recent news, AutoZone reported its fiscal third-quarter 2025 financial results, revealing a mixed performance. The company’s revenue exceeded expectations, reaching $4.46 billion, a 5.4% increase year-over-year, but earnings per share (EPS) fell short at $35.36, below the forecasted $37.10. The earnings miss was attributed to margin pressures and foreign exchange headwinds. Analysts from several firms have adjusted their price targets and ratings following the earnings release. BMO Capital Markets raised its price target for AutoZone to $4,100, maintaining an Outperform rating, while Barclays (LON:BARC) increased its target to $3,916 and kept an Overweight rating.
Truist Securities also lifted its price target to $4,038, expressing optimism about the company’s commercial sales growth, which was the best in approximately two years. Despite the challenges, CFRA slightly reduced its price target to $4,200 but maintained a Buy rating, citing the company’s strong domestic comparable store sales growth. Analysts across the board have acknowledged AutoZone’s strategic initiatives and investments, which have contributed to market share gains despite ongoing margin pressures. The consensus among analysts suggests a positive long-term outlook for AutoZone, driven by its growth strategies and potential to capture further market share.
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