DA Davidson lifts AutoZone stock rating, raises target to $4,192

On Friday, DA Davidson upgraded AutoZone stock, trading on the New York Stock Exchange (NYSE:AZO), from Neutral to Buy, significantly raising the price target to $4,192 from the previous $3,500. The upgrade by analyst Michael Baker reflects a positive outlook for the company, citing several key factors that contribute to the firm’s decision. The stock, currently trading near its 52-week high of $3,704, has demonstrated strong momentum with an 18.3% return over the past six months. InvestingPro data shows the company maintains a healthy financial profile with a "GOOD" overall score.

Baker highlighted four main reasons for the upgrade, including investor preference for high-quality companies, AutoZone’s defensive market position, benefits from inflation and tariffs, and the company’s gains in commercial market share. These elements are seen as driving forces behind the company’s current and future performance. With a substantial market capitalization of $59.84 billion and an impressive gross profit margin of 53.13%, AutoZone has demonstrated its market strength. According to InvestingPro, the company’s low volatility (Beta: 0.71) supports its defensive positioning, while maintaining a moderate debt level.

Additionally, AutoZone has been selected as DA Davidson’s next "Best-of-Breed Bison" company. This designation is part of a research framework developed by DA Davidson to identify long-term, top-tier companies with sustainable competitive advantages and favorable risk/reward dynamics. The company’s financial performance supports this designation, with revenue growing at 4.72% and maintaining strong profitability metrics. For deeper insights into AutoZone’s valuation and growth potential, investors can access comprehensive analysis and 12 additional ProTips through InvestingPro’s detailed research reports.

According to Baker, AutoZone meets 10 out of the 12 criteria necessary to be considered a "Best-of-Breed Bison." These criteria include possessing a strong competitive moat, maintaining high profit margins, and demonstrating prudent management of company resources.

The raised price target to $4,192 is based on a discounted cash flow analysis conducted by DA Davidson. This new target reflects the firm’s confidence in AutoZone’s growth prospects and its ability to continue delivering value to its shareholders.

In other recent news, AutoZone has been the focus of several analyst updates and evaluations. Erste Group initiated coverage of AutoZone with a Buy rating, emphasizing the company’s strong operating margin and international expansion as key factors for sustained profitability. UBS analyst Michael Lasser raised the price target for AutoZone to $4,025, maintaining a Buy rating, and highlighted the company’s strategic growth initiatives as a driver for market share gains and consistent earnings growth. Similarly, TD Cowen increased its price target to $3,900, citing improvements in AutoZone’s Do-It-For-Me segment and ongoing investments in the professional auto service sector.

Truist Securities also adjusted its price target to $3,841, noting a modest improvement in domestic sales trends and a significant increase in Commercial sales. The firm pointed out that tariffs might boost comparable sales by inflating vehicle prices, which could encourage more repair activities. Meanwhile, DA Davidson raised its price target to $3,500 but maintained a Neutral rating, acknowledging AutoZone’s resilience despite revenue misses due to currency fluctuations. The ability to pass tariff costs to consumers was highlighted as a strength, potentially extending vehicle lifespans and maintaining demand for AutoZone’s offerings. These recent developments suggest a cautiously optimistic outlook from analysts regarding AutoZone’s strategic positioning and potential for growth.

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