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On Tuesday, Truist Securities expressed confidence in AutoZone (NYSE:AZO) shares, raising the price target to $4,038 from $3,995 while maintaining a Buy rating. The automotive parts retailer, currently trading at $3,673 with a market capitalization of $61.4 billion, demonstrated robust performance with its best comparable store sales and Commercial sales growth in approximately two years. Although margins faced slight pressure and were somewhat below expectations, Truist analysts anticipate these pressures to alleviate soon, citing shrink and distribution center utilization improvements as potential factors. According to InvestingPro, AutoZone maintains a strong gross profit margin of 53.1% and has delivered impressive returns of 37% over the past year.
AutoZone’s recent quarterly results have been bolstered by its strategic investments and initiatives, leading to market share gains and sales growth across various channels and customer demographics. The company’s revenue grew 4.7% in the last twelve months to $18.7 billion, while maintaining a "GOOD" overall financial health score according to InvestingPro. Despite foreign exchange headwinds impacting sales and earnings, analysts expect the effect to vary with exchange rates.
Truist analysts also pointed out that margins are predicted to stabilize in the upcoming quarters. They believe that potential tariff-related price increases could act as an additional boost for the company. The overall tone from Truist Securities suggests that AutoZone’s current strategies are paying off and that the company is well-positioned for continued success.
The firm’s analysis acknowledges the challenges faced by AutoZone, such as margin pressures and foreign exchange impacts, but also highlights the company’s resilience and potential for growth. With the revised price target, Truist Securities reaffirms its optimistic stance on AutoZone shares, encouraging investors to remain buyers of the stock.
In other recent news, AutoZone reported its third-quarter earnings for 2025, revealing a mixed financial performance. The company’s earnings per share (EPS) came in at $35.36, falling short of the anticipated $37.10, while revenue exceeded expectations at $4.46 billion, surpassing the forecast of $4.42 billion. Despite the earnings miss attributed to weaker margins and foreign exchange rates, AutoZone experienced a 5.4% increase in total sales, driven by a 5% rise in domestic same-store sales and an 8.1% increase in international same-store sales, adjusted for constant currency.
CFRA analyst Garrett Nelson adjusted AutoZone’s stock price target to $4,200, a slight decrease from the previous $4,225, while maintaining a Buy rating on the stock. The revision followed the company’s earnings announcement, with Nelson noting the earnings miss but highlighting the significant growth in domestic comparable store sales. The company’s gross margin contracted by 80 basis points to 52.7%, contributing to the earnings miss.
AutoZone’s management expressed optimism about future prospects, attributing domestic sales growth to successful same-store sales initiatives and improvements in inventory metrics. The company plans to continue investing in growth initiatives, including the opening of 100 international stores this fiscal year. AutoZone is also focusing on improving gross margins as new distribution centers become operational. Despite the challenges, CFRA reaffirmed its Buy opinion on AutoZone shares, signaling confidence in the company’s future performance.
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