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Investing.com - TD Cowen has raised its price target on Advance Auto Parts (NYSE:AAP) to $62.00 from $53.00 while maintaining a Hold rating on the stock. The current price of $62.42 appears fairly valued according to InvestingPro analysis, with the stock showing remarkable momentum, gaining over 41% in the past six months.
The research firm increased its third-quarter earnings per share estimate to $0.91, citing expectations for a slightly stronger EBIT margin, though it maintained its flat comparable sales estimate due to "lower visibility." While the company isn’t currently profitable, InvestingPro data reveals analysts expect positive earnings of $1.98 per share this fiscal year.
TD Cowen noted that despite AAP’s stock price doubling since first-quarter earnings results, investors are becoming more optimistic about turnaround prospects for the auto parts retailer.
The firm acknowledged that potential upside to margins could drive significant increases to estimates given the company’s current low base, with some investors expecting stronger comparable sales due to inflation.
TD Cowen indicated it understands the bullish case but requires evidence that the supply chain turnaround is taking hold and needs "greater confidence in management’s ability to stabilize and grow market share" before becoming more positive on the stock.
In other recent news, Advance Auto Parts has seen a series of updates from various analysts following its first-quarter financial results. Mizuho (NYSE:MFG) raised its price target for the company to $44, citing better-than-expected earnings and an improved fiscal outlook for 2025 and 2026. Redburn-Atlantic upgraded the stock from a sell to a neutral rating, with a new price target of $45, anticipating a favorable second half of the year despite ongoing challenges. DA Davidson also increased its price target to $47, pointing to early signs of successful turnaround efforts but maintaining a neutral stance due to past performance concerns.
Furthermore, TD Cowen adjusted its price target to $53, highlighting the company’s strong performance in the Do-It-For-Me segment and improved margins. The firm acknowledged the company’s progress toward its fiscal year 2025 targets but noted ongoing challenges in expanding its initiatives. RBC Capital Markets maintained its price target at $44, recognizing positive key performance indicators but calling for more evidence of sustained improvement. These developments indicate that while Advance Auto Parts is showing signs of progress, analysts remain cautiously optimistic, reflecting on the company’s historical challenges and the competitive landscape.
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