O’Reilly Automotive stock maintains Buy rating at UBS on strong comps

Investing.com - UBS has reiterated a Buy rating and $120.00 price target on O’Reilly Automotive (NASDAQ:ORLY), highlighting the auto parts retailer’s "best in class comps" and gross margin expansion of 51.4%. According to InvestingPro analysis, the company currently appears overvalued, with a "GOOD" Financial Health score of 2.73 out of 5.

The investment firm noted that O’Reilly’s performance presents clear narratives for both bullish and bearish investors. Bulls can point to superior comparable sales growth and margin improvements, while bears might focus on "persistently elevated growth in SG&A per store" and valuation concerns.

UBS indicated that the company’s earnings guidance revision was largely driven by a lower tax rate rather than operational improvements, which could be a point of contention among investors.

Looking ahead to fiscal 2026, UBS projects potential earnings per share of $3.40-$3.50, assuming mid-single digit comparable sales growth continues alongside modest gross margin expansion and slower operating cost growth.

The firm justified its positive outlook by placing O’Reilly among what it calls "COW retailers" - alongside Costco and Walmart - suggesting the company’s "stand-out performance warrants a premium multiple" similar to these other top-performing retail stocks.

In other recent news, O’Reilly Automotive reported strong third-quarter 2025 earnings, surpassing consensus estimates for both revenue and earnings. This marks the fourth consecutive quarter where the company has outperformed comparable sales expectations and the second straight quarter where it has increased its guidance. Following these results, DA Davidson reiterated its Buy rating with a price target of $115.00. Mizuho also raised its price target for O’Reilly Automotive to $110.00, citing solid third-quarter comparable sales growth of 5.6%. UBS increased its price target to $120.00, maintaining a Buy rating, and highlighted O’Reilly’s consistent performance. TD Cowen set a new price target of $125.00, emphasizing the company’s leading position in the aftermarket sector and potential for market share growth. RBC Capital raised its price target to $111.00, reflecting a positive outlook on the auto parts retail sector amid anticipated tariff-led inflation. These developments underscore a strong analyst consensus on O’Reilly Automotive’s current and future performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.