BMO lifts O’Reilly stock price target to $1,450, keeps Outperform rating

On Monday, BMO Capital Markets maintained a positive outlook on O’Reilly Automotive (NASDAQ:ORLY) shares, elevating the price target from $1,400.00 to $1,450.00 while reiterating an Outperform rating. Tristan Thomas-Martin, an analyst at BMO, highlighted the company’s long-term growth prospects despite acknowledging some short-term economic challenges. The stock currently trades near its 52-week high of $1,350.27, with a market capitalization of $75.9 billion. According to InvestingPro analysis, the stock appears overvalued at current levels, though 11 additional ProTips are available to subscribers for deeper insight.

O’Reilly Automotive recently disclosed its fourth-quarter results for 2024, which presented a mixed performance. The company reported higher-than-expected same-store sales (SSS), but margins fell short of forecasts. Thomas-Martin noted that the quarterly results might cause investors to be more cautious, especially with the 2025 same-store sales and margin guidance being lighter than predicted. The company maintains a solid gross profit margin of 51.2% and achieved revenue growth of 5.67% in the last twelve months. InvestingPro’s comprehensive financial health assessment rates O’Reilly as "GOOD," with particularly strong scores in profitability and price momentum.

According to Thomas-Martin, the rationale for maintaining the Outperform rating lies in the confidence in the enduring industry tailwinds, O’Reilly’s growth strategy, market share gains, and opportunities for geographic expansion. The analyst’s commentary underscored the strength of O’Reilly’s business model and its capacity to navigate through periods of discretionary spending softness. This view is supported by the company’s impressive return on assets of 16.59% and its moderate debt levels, as revealed in InvestingPro’s detailed financial analysis, available in the Pro Research Report covering this and 1,400+ other top US stocks.

O’Reilly Automotive has been focusing on its growth algorithm, which includes expanding its geographical footprint. The company’s ability to adapt and take market share has been a cornerstone of its strategy, positioning it well for future growth.

Investors and market watchers will continue to monitor O’Reilly’s performance, particularly in how it manages same-store sales and margin pressures in a fluctuating economic environment. The new price target set by BMO Capital indicates a belief in the company’s potential to achieve higher valuation based on its strategic initiatives and industry position.

In other recent news, O’Reilly Automotive has been the subject of various analyst reports. BMO Capital Markets increased its price target on O’Reilly shares to $1,450, maintaining an Outperform rating. The firm cited the company’s fourth-quarter results for the 2024 fiscal year and potential for continued market share gains as reasons for the adjustment.

Similarly, TD Cowen analysts raised their price target to $1,500 while maintaining a Buy rating. They expressed optimism about O’Reilly’s continued market share growth and potential benefits from a tariff environment. However, they also noted a potential reduction in stock buybacks due to lower anticipated free cash flow in 2025.

DA Davidson also showed confidence in O’Reilly, increasing its price target to $1,525 and maintaining a Buy rating. The firm highlighted the company’s strong performance and exceptional comparable store sales growth.

Truist Securities raised its price target to $1,468, sustaining a Buy rating, citing the company’s robust fourth-quarter results and potentially understated guidance for 2025. Lastly, Mizuho (NYSE:MFG) Securities increased its price target to $1,400, reiterating an Outperform rating, following O’Reilly’s recent performance and the company’s confidence in its ability to manage costs effectively.

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