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On Tuesday, CFRA analyst Garrett Nelson increased the price target for AutoZone shares (NYSE:AZO) to $3,800 from the previous $3,650, while reaffirming a Buy rating for the company. Currently trading at $3,453.66, the stock maintains a P/E ratio of 22.53 and sits near its 52-week high of $3,519. The revised target is based on a projected price-to-earnings (P/E) ratio of 22.0 times for fiscal year 2026, ending in August, which represents a premium compared to historical averages. According to InvestingPro analysis, the stock appears overvalued at current levels, with 8 additional exclusive insights available to subscribers.
AutoZone reported earnings per share (EPS) of $28.29 for the February quarter, a 2.1% decrease from $28.89 in the same period last year, and below the consensus estimate of $28.97. The shortfall was attributed to lower-than-expected revenue, which saw a 2.3% increase to $3.95 billion, falling $30 million short of the consensus. Despite this, domestic same store sales grew by 1.9%, slightly above the consensus by 30 basis points, and gross margin remained steady at 53.9%, exceeding expectations by 10 basis points. InvestingPro data shows the company maintains strong financial health with a 53.13% gross profit margin and steady revenue growth of 5.19% over the last twelve months.
Nelson noted that while the top and bottom line results were disappointing and not typical for AutoZone, management emphasized that currency fluctuations had a negative impact on reported sales and earnings. In light of these results, CFRA has adjusted its EPS estimates for fiscal year 2025 to $152.10 from $153.30 and for fiscal year 2026 to $172.50 from $178.10.
The analyst remains optimistic about AutoZone’s prospects, citing potential gains in domestic market share following Advance Auto Parts (NYSE:AAP)’ decision to close over 500 U.S. stores. Nelson also highlighted AutoZone’s promising growth opportunities in Mexico and Brazil, reinforcing the rationale behind the price target increase and the maintained Buy rating.
In other recent news, AutoZone has been the subject of multiple analyst updates and company developments. UBS analyst Michael Lasser reiterated a Buy rating for AutoZone, maintaining a price target of $3,875. Lasser expressed optimism about AutoZone’s resilience amid market challenges, expecting the company to demonstrate consistent performance. Meanwhile, TD Cowen raised its price target for AutoZone from $3,450 to $3,800, citing optimism about the company’s do-it-for-me segment and strategic initiatives like megahub expansions. BMO Capital Markets initiated coverage of AutoZone with an Outperform rating and a $3,700 price target, highlighting the company’s potential for market share gains and international growth.
Additionally, AutoZone announced the election of nine directors at its Annual Meeting of Shareholders, along with the approval of several proposals, including the ratification of Ernst & Young LLP as the independent public accounting firm. The company also promoted Bailey Childress and Luke Rauch to Senior Vice President roles, enhancing its executive team as it continues global expansion. These developments underscore AutoZone’s strategic initiatives and corporate governance efforts, contributing to its positive outlook in the automotive aftermarket industry.
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