Gold prices steady ahead of Fed decision; weekly weakness noted
On Monday, RBC Capital Markets adjusted their outlook on O'Reilly (NASDAQ:ORLY) Automotive (NASDAQ: ORLY), increasing the price target from $1,286.00 to $1,416.00, while maintaining an Outperform rating on the company's shares. Currently trading at $1,263.87 and near its 52-week high, InvestingPro data indicates the stock appears overvalued relative to its Fair Value. The adjustment comes as the firm expresses a confident stance ahead of O'Reilly's financial report expected on February 5.
Steven Shemesh, an analyst at RBC Capital, provided insight into the decision, noting that after two downward revisions in calendar year 2024, the expectations for O'Reilly Automotive now seem more attainable. With a solid YTD return of 5.75% and impressive 22.64% gain over the past year, this sets a favorable stage for 2025, which is anticipated to witness a boost in earnings per share (EPS) growth as the company scales back on reinvestment spending.
Shemesh anticipates a positive fourth-quarter performance for O'Reilly, with a same-store sales increase of 2.5 to 3.0 percent. He forecasts an EPS of $9.88, which is approximately 2 percent higher than the consensus estimate of $9.74. The EPS projection is supported by a slightly more optimistic revenue assumption and a reduced tax rate, attributed to the tolling of specific tax periods.
Looking ahead to the fiscal year 2025, RBC Capital expects O'Reilly to project a comparable store sales growth of 2 to 4 percent, with RBC's own estimate at 3.5 percent. EPS growth is projected to be in the range of 6 to 8 percent, excluding share repurchases. When factoring in share buybacks, the growth estimate increases to 8 percent, or even 10 percent according to RBC's calculations. Despite this guidance, the firm believes that the market will likely overlook these figures, given the management's history of consistently outperforming expectations. For deeper insights into O'Reilly's valuation and growth prospects, InvestingPro subscribers can access the comprehensive Pro Research Report, which includes detailed analysis of the company's financial health score of 2.84 (GOOD) and other key metrics.
In other recent news, O'Reilly Automotive has seen several significant developments. 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 due to a positive turn in the business cycle and a robust long-term outlook. TD Cowen also increased its price target on O'Reilly Automotive shares to $1,400, maintaining a buy rating.
O'Reilly Automotive has reported Q3 earnings per share (EPS) of $10.55, slightly missing estimates, and revised its 2024 guidance downward, expecting EPS between $40.60 and $41.10. The company also announced a $2 billion increase in its share repurchase program, raising the total authorization to $27.75 billion.
Furthermore, the company is expanding its geographical footprint, having opened 47 new stores in Q3, bringing the total to 111 for the year. These recent developments highlight the continued growth and strategic initiatives of O'Reilly Automotive.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.