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On Monday, TD Cowen analysts maintained a bullish stance on O’Reilly Automotive (NASDAQ:ORLY), reiterating their Buy rating and $1,400.00 price target. The firm highlighted the company as their Top Idea within the sector, emphasizing O’Reilly’s balance of offensive and defensive strengths. The stock, currently trading at $1,316.06, is near its 52-week high and has delivered an impressive 23.6% return over the past year. The analysts project that O’Reilly will lead the industry with its comparable store sales (comps) growth in fiscal year 2025, driven by a robust Do-It-For-Me (DIFM) segment.
The analysts anticipate that O’Reilly will surpass fourth-quarter expectations for comps and earnings per share (EPS). They also speculate that management might forecast fiscal year 2025 comps to increase by 2-4%, with the potential to adjust prices later in the year. However, they noted that it would not be surprising if the guidance fell within the more typical range of 3-5%.
TD Cowen’s positive outlook for O’Reilly is based on the company’s exceptional operational performance and the rarity of its market position, which they believe justifies a valuation premium. With a current P/E ratio of 32.28 and a market capitalization of $75.84 billion, InvestingPro analysis indicates that the stock is currently trading above its Fair Value. Nevertheless, the analysts are cognizant of the fact that O’Reilly’s price-to-earnings ratio is currently more than two standard deviations higher than its historical average when compared to AutoZone (NYSE:AZO), suggesting a significant premium.
O’Reilly’s strategic capabilities, which allow it to perform well in various market conditions, have earned it the confidence of TD Cowen. The analysts expect the company to continue its track record of strong comps growth, particularly in the DIFM market, which caters to professional service providers.
In summary, the reiteration of the Buy rating and the $1,400.00 price target by TD Cowen underscores their belief in O’Reilly Automotive’s ability to thrive in a potentially sluggish year for the sector. The company’s potential to exceed fourth-quarter expectations and to provide solid guidance for the coming fiscal year has positioned it as a top pick among its peers. InvestingPro data reveals a strong financial health score and steady revenue growth of 5.25% over the last twelve months. For deeper insights into O’Reilly’s valuation and growth prospects, including 12 additional ProTips and comprehensive financial metrics, consider accessing the full Pro Research Report available on InvestingPro.
In other recent news, O’Reilly Automotive reported Q3 earnings per share (EPS) of $10.55, slightly missing estimates, and revised its 2024 guidance downward, projecting an EPS between $40.60 and $41.10. Despite this, the company increased its share repurchase program by $2 billion, bringing the total authorization to $27.75 billion. O’Reilly Automotive has also expanded its geographical reach, opening 47 new stores in Q3, which brings the total to 111 for the year.
Several analyst firms have adjusted their outlook on O’Reilly Automotive. UBS maintained a Buy rating on the company’s stock, highlighting strategic investments as a key performance driver. RBC Capital lifted their price target for the company to $1,416, citing favorable earnings per share growth. Guggenheim raised its stock target for O’Reilly to $1,400, maintaining a buy rating, while Truist Securities kept its buy rating with a $1,313 target. Morgan Stanley (NYSE:MS) upgraded the company’s stock to Overweight, citing a positive turn in the business cycle and a robust long-term outlook.
These recent developments reflect the continuous growth and strategic initiatives of O’Reilly Automotive.
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