BMO Capital lifts AutoZone stock target to $3,850, keeps Outperform

On Wednesday, BMO Capital Markets updated their financial outlook on AutoZone (NYSE:AZO), increasing the price target to $3,850 from $3,700, while reiterating an Outperform rating on the shares. Currently trading at $3,473.66 with a market capitalization of $58.3 billion, the stock sits near its 52-week high of $3,563.57. The revision follows the company’s fiscal second quarter 2025 results, which, aside from same-store sales (SSS), slightly missed analyst expectations. The results were influenced by adverse weather conditions and continuous investments aimed at growth. According to InvestingPro analysis, the stock appears overvalued at current levels, with 8 analysts recently revising their earnings expectations downward.

Tristan Thomas-Martin from BMO Capital noted that despite the slight miss in the recent quarter, AutoZone’s management remains optimistic about their strategies to expand their market presence in a highly fragmented industry. The company, which maintains a GOOD overall financial health score according to InvestingPro metrics, anticipates stronger performance in the second half of fiscal year 2025, particularly within the do-it-yourself (DIY) and commercial sales segments. The company has demonstrated solid performance with revenue growth of 4.72% and maintains its position as a prominent player in the Specialty Retail industry.

While tariffs continue to be a point of concern for the company, Thomas-Martin believes that AutoZone can counterbalance these challenges through strategic pricing and the consistent demand for maintenance and repair services. These factors are pivotal in the automotive parts industry and are expected to help sustain the company’s revenue stream.

Reflecting on the ongoing strategic investments, BMO Capital has adjusted its fiscal year 2025 earnings estimates downwards. However, the firm has increased its projections for fiscal year 2026, citing expectations for accelerated market share gains as the primary reason for the optimistic outlook.

The updated price target of $3,850 reflects BMO Capital’s confidence in AutoZone’s potential for growth and market share expansion in the upcoming fiscal year. The Outperform rating suggests that the firm believes AutoZone stock will perform better than the overall market or its sector in the near future. For deeper insights into AutoZone’s valuation and growth prospects, InvestingPro subscribers can access comprehensive analysis, including 12 additional ProTips and detailed financial metrics in the Pro Research Report.

In other recent news, AutoZone Inc. reported its second-quarter results for fiscal year 2025, revealing a mixed performance. The company posted earnings per share (EPS) of $28.29, which missed analyst expectations of $29.06. However, AutoZone’s revenue reached $4 billion, surpassing forecasts of $3.98 billion, indicating strong sales performance. The company experienced a year-over-year sales increase of 2.4%, with domestic same-store sales growing by 1.9% and international same-store sales surging by 9.5% on a constant currency basis.

AutoZone plans to open approximately 100 international stores this fiscal year and invest over $1 billion in capital expenditures, focusing on expanding its commercial business and enhancing customer service. Despite the earnings miss, analysts from firms like Jefferies and Morgan Stanley (NYSE:MS) noted investor confidence in AutoZone’s long-term growth strategy. The company faces challenges such as foreign exchange rate fluctuations and potential new tariffs on Chinese goods, which may impact supply chain costs.

AutoZone’s management remains optimistic about the future, citing higher vehicle prices as a potential benefit for the business. The company continues to invest in growth initiatives, including new store openings and distribution centers, to drive market share and improve customer service.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.