TSX drops after Canadian index edges higher in prior session
Investing.com - Erste Group downgraded AutoZone (NYSE:AZO) from Buy to Hold on Friday, as the stock currently trades at $3,705.63 with a market cap of $61.63 billion.
The research firm cited challenges related to higher product costs resulting from U.S. tariffs, which are affecting the auto parts retailer’s profitability. InvestingPro data shows 10 analysts have revised their earnings downwards for the upcoming period, aligning with these concerns.
According to Erste Group, AutoZone cannot fully pass these increased costs to customers due to strong competition in the market, creating pressure on margins. Despite these challenges, the company maintains a healthy gross profit margin of 52.62%.
The firm acknowledged that AutoZone is benefiting from the current U.S. economic slowdown, as consumers keep their vehicles longer, leading to increased demand for repairs and replacement parts. The company generated $18.94 billion in revenue over the last twelve months.
Despite these positive trends in repair demand, Erste Group determined that tariff-related cost pressures outweigh growth opportunities in the current environment, prompting the downgrade. The stock appears overvalued according to InvestingPro Fair Value metrics, with analyst price targets ranging from $2,900 to $4,900. For comprehensive analysis including 11 more ProTips and a detailed Pro Research Report on AutoZone, subscribe to InvestingPro.
In other recent news, AutoZone, Inc. has announced that its Board of Directors approved an additional $1.5 billion for the company’s ongoing share repurchase program. This brings the total authorization for share repurchases to $40.7 billion since the program’s inception in 1998. The company reported strong fourth-quarter top-line results, although it faced margin pressures due to LIFO accounting impacts. Despite these challenges, Guggenheim noted AutoZone’s solid operating performance and raised its stock price target to $4,600, maintaining a Buy rating. BMO Capital also increased its price target to $4,600, citing margin pressures but maintaining an Outperform rating. UBS adjusted its price target downward to $4,800 due to LIFO-related charges, while TD Cowen maintained a $4,900 price target, highlighting growth in the Do-It-For-Me segment. These developments reflect various analyst perspectives on AutoZone’s financial performance and outlook.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.