AutoZone stock price target raised to $4,300 by TD Cowen

On Monday, TD Cowen analyst Max Rakhlenko updated AutoZone’s (NYSE:AZO) financial outlook, raising the price target to $4,300 from $3,900 while maintaining a Buy rating on the company’s shares. The stock, currently trading near its 52-week high of $3,916.81, has demonstrated strong momentum with a 29.78% return over the past year. Rakhlenko expressed confidence in AutoZone’s potential for market share growth amidst a fluctuating macroeconomic environment, highlighting the company’s position to capitalize on opportunities more readily available than in previous years.

The analyst anticipates an acceleration in AutoZone’s professional business segment but expects a lower EBIT margin as a result. With a current P/E ratio of 24.58 and impressive gross profit margins of 53.13%, AutoZone maintains strong fundamentals. Despite a recent expansion in AutoZone’s price-to-earnings ratio, it continues to trade at a traditional discount compared to its competitor O’Reilly (NASDAQ:ORLY). Rakhlenko suggests that this gap could narrow if the do-it-for-me (DIFM) service trend persists. According to InvestingPro, AutoZone’s overall financial health score is rated as GOOD, supported by robust profitability metrics.

Rakhlenko adjusted AutoZone’s third-quarter fiscal year 2025 earnings per share (EPS) estimate downward to $35.75, which falls below the consensus estimate of $37.01. The revision accounts for an increase in domestic comparable sales to 2.9%, including a 7.2% rise in DIFM sales. However, the estimated EBIT margin was conservatively reduced to 20.0% due to gross margin pressures from product mix and increased selling, general, and administrative (SG&A) expenses related to investments.

The price target boost to $4,300 reflects TD Cowen’s expectation that AutoZone’s DIFM segment will continue to gain momentum, market share growth will accelerate, and the expansion of mega hubs will hasten over upcoming quarters. While the valuation relative to the S&P 500 has grown, AutoZone’s stock remains roughly aligned with its historical discount to O’Reilly, which could modestly tighten as DIFM momentum builds. Rakhlenko acknowledged that the upcoming earnings report might introduce short-term market volatility but reaffirmed a bullish stance on AutoZone’s long-term performance.

In other recent news, AutoZone is set to announce its fiscal third-quarter earnings on May 27, 2025, with Evercore analysts optimistic about the company’s performance. They anticipate AutoZone to exceed market expectations, projecting earnings per share of $38.16, higher than the consensus estimate of $37.01. Oppenheimer has also upgraded AutoZone to an Outperform rating, setting a price target of $4,600, citing resilience in the auto parts retail sector amid economic challenges. Additionally, AutoZone has expanded its Board of Directors by appointing Claire Rauh McDonough, Rivian (NASDAQ:RIVN)’s CFO, bringing valuable experience to the board. In corporate governance, AutoZone has amended its by-laws to lower the threshold for shareholders to call a special meeting, enhancing shareholder rights. Evercore, meanwhile, has downgraded Lowe’s (NYSE:LOW), anticipating a decline in comparable sales and a revision in its EPS guidance. UBS has noted that AutoZone, with its pricing power, could gain an edge amidst the challenges posed by new tariffs announced by former President Donald Trump. These developments reflect AutoZone’s strategic moves in a dynamic market environment.

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