Raymond James lifts AutoZone stock target to $4,200, keeps strong buy

On Wednesday, Raymond (NSE:RYMD) James analyst Bobby Griffin increased the price target for AutoZone (NYSE:AZO) to $4,200 from the previous target of $4,000, while reiterating a Strong Buy rating on the company’s shares. According to InvestingPro data, AutoZone currently trades at $3,695.66, with analysts’ targets ranging from $2,830 to $4,850. Griffin highlighted AutoZone’s positive sales momentum and strategic investments, which are expected to drive further growth. The company maintains a "GOOD" Financial Health score, though InvestingPro analysis suggests the stock is currently trading above its Fair Value.

The analyst noted that despite slight downward adjustments to the earnings per share estimates for fiscal years 2025 and 2026, the outlook for AutoZone remains positive. With a robust gross profit margin of 53.13% and revenue growth of 4.72% over the last twelve months, the company’s commercial segment, particularly the Do-It-For-Me (DIFM) category, is gaining market share, and the Do-It-Yourself (DIY) sector is showing signs of improvement. Furthermore, AutoZone’s mega hub expansion is on track, which is anticipated to enhance network productivity. For deeper insights into AutoZone’s financial health and growth metrics, InvestingPro subscribers can access comprehensive analysis and additional ProTips.

Griffin pointed out that while short-term margin pressures have affected earnings before interest and taxes (EBIT), these are seen as temporary challenges. The company’s EBITDA stands at $4.32 billion, with a market capitalization of $61.81 billion, demonstrating its significant market presence. With year-over-year comparisons easing and foreign exchange headwinds expected to diminish in fiscal year 2026, sequential improvements are anticipated in the fourth quarter.

AutoZone’s commercial momentum and long-term growth drivers remain strong, according to Griffin. The company’s mega hub expansion, aiming for 300 locations, is a key strategy to improve availability for both DIY and DIFM customers. This expansion, coupled with improved inventory placement and faster delivery times, has led to an uptick in DIFM sales.

Additionally, the DIY segment witnessed a positive trend, with a roughly 3% year-over-year increase. As a prominent player in the Specialty Retail industry, AutoZone is positioned to benefit from an economic rebound, with potential additional gains from inflation and tariff impacts. The company’s international growth is also a highlight, with plans to open approximately 100 new stores this year and high single-digit constant currency comparable store growth, despite current foreign exchange challenges. Get access to AutoZone’s complete financial analysis and growth potential through the detailed Pro Research Report, available exclusively on InvestingPro.

In conclusion, Griffin reaffirmed that AutoZone’s structural growth levers, disciplined execution, and shareholder-friendly capital allocation align with the investment thesis, indicating a robust trajectory for the company.

In other recent news, AutoZone has seen several updates from analysts regarding its financial outlook and stock targets. Wells Fargo (NYSE:WFC) maintained its Overweight rating on AutoZone with a price target of $4,200, noting strong domestic sales growth and strategic initiatives like the opening of new megahubs. DA Davidson raised its price target to $4,850, highlighting AutoZone’s investments in its commercial business and positive trends in the DIY segment. Despite some margin pressures, DA Davidson remains optimistic about long-term growth.

Jefferies also increased its price target to $4,255, pointing out a strong performance in the do-it-for-me segment and growth in Mexico, although foreign exchange rates have posed challenges. BMO Capital Markets lifted its target to $4,100, citing AutoZone’s potential to capture more market share despite recent margin pressures. Barclays (LON:BARC) raised its price target to $3,916, maintaining an Overweight rating, and expressed confidence in AutoZone’s sales growth and strategic direction.

These developments follow AutoZone’s recent earnings report, which revealed earnings per share below expectations but showed resilience in sales growth across key segments. Analysts from these firms suggest that AutoZone’s ongoing investments and strategic moves are expected to contribute to its performance, even amidst challenges like foreign exchange impacts and margin pressures. Investors are closely watching these updates as AutoZone navigates the competitive landscape of the automotive parts industry.

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