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On Tuesday, Barclays (LON:BARC) updated its outlook on AutoZone stock (NYSE: NYSE:AZO), raising the price target to $3,916 from the previous target of $3,585. The firm has maintained its Overweight rating on the company’s shares. This adjustment follows the release of AutoZone’s recent earnings report. Currently trading at $3,695, AutoZone maintains strong financial health with an overall "GOOD" rating according to InvestingPro metrics, which show the company generated $18.7 billion in revenue over the last twelve months.
Seth Sigman, an analyst at Barclays, noted that despite a downward revision in the earnings per share (EPS) forecast for fiscal year 2025 (FY25), the company’s sales growth in the third quarter, encompassing both the do-it-yourself (DIY) and do it for me (DIFM) sectors, reinforces confidence in AutoZone’s strategic direction. With a robust gross profit margin of 53% and impressive return on assets of 15%, the company demonstrates strong operational efficiency. The analyst expects that this momentum will position AutoZone for a stronger EPS performance in fiscal year 2026 (FY26), assuming that foreign exchange rates and various investments stabilize.
Sigman’s analysis includes a comparison of AutoZone’s performance with industry benchmarks, highlighting the company’s significant market share gains during the fiscal period. As a prominent player in the Specialty Retail industry with a market capitalization of $61.9 billion, AutoZone has been successful in capturing a larger portion of the market relative to competitors. InvestingPro analysis reveals 8 additional key insights about AutoZone’s market position and growth potential.
Regarding concerns about margin weakness, Sigman indicated that the company has acknowledged these challenges but anticipates improvements moving into the fourth quarter. The expectation is that AutoZone will continue to manage its EPS effectively, adopting a strategy that considers multiple quarters ahead.
In summary, Barclays’ increased price target and sustained Overweight rating reflect a positive outlook on AutoZone’s ability to grow earnings and manage operational challenges effectively in the coming fiscal years.
In other recent news, AutoZone reported its third-quarter 2025 earnings, showcasing a mixed financial performance. The company achieved revenue of $4.46 billion, surpassing forecasts of $4.42 billion, but its earnings per share (EPS) fell short at $35.36 compared to the expected $37.10. The revenue growth was driven by a 5% increase in domestic same-store sales and an 8.1% rise in international same-store sales, adjusted for constant currency. Despite the revenue beat, the company’s gross margin contracted by 80 basis points to 52.7%, contributing to the EPS miss. Truist Securities recently raised AutoZone’s stock price target to $4,038, maintaining a Buy rating, while CFRA adjusted its price target slightly down to $4,200, also retaining a Buy rating. Analysts from Truist and CFRA highlighted AutoZone’s strategic investments and market share gains but noted challenges such as foreign exchange impacts and margin pressures. Looking ahead, AutoZone management expressed optimism about improving gross margins as new distribution centers become operational, with continued investments in technology and supply chain improvements.
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