On Wednesday, Evercore ISI updated its outlook on AutoZone (NYSE:AZO), raising the price target from $3,400.00 to $3,450.00 while maintaining an Outperform rating. The firm's analysis highlighted AutoZone's ability to navigate a volatile market environment and its strategic investments in labor, mega hubs, and faster delivery services aimed at expanding its competitive edge.
Despite a modest 0.3% increase in domestic comparable store sales and a 1% year-over-year decline in EBIT dollars, Evercore ISI anticipates an improvement in underlying EBIT dollar growth to reach 3-4% in the coming quarters.
This projection is based on the assumption that the company will continue to see stronger performance toward the end of the quarter, which is expected to carry into the second fiscal quarter with the onset of colder weather.
The investment firm acknowledged the challenges AutoZone faced in the first fiscal quarter, including a shortfall in expectations and increased expenses due to higher SG&A and foreign exchange headwinds.
Consequently, Evercore ISI adjusted its fiscal year 2025 earnings per share estimate downward by 3%. The new price target of $3,450.00 is based on approximately 19 times the adjusted earnings per share of $182 anticipated for calendar year 2026.
Evercore ISI's report noted that while tariffs remain an uncertain factor for the industry, AutoZone's product offerings and vendor relationships could help mitigate the impact of cost increases. The firm remains optimistic about AutoZone's execution capabilities, pricing power, and strong capital management strategies.
The report concluded with the view that AutoZone's methodical leveraged buyout strategy and its ability to cater to essential consumer needs position it well in a fluctuating consumer and regulatory landscape heading into 2025.
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