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Investing.com - Truist Securities raised its price target on Advance Auto Parts (NYSE:AAP) to $53.00 from $51.00 on Friday, while maintaining a Hold rating on the automotive parts retailer. The stock currently trades at $57.54, with InvestingPro data showing a WEAK overall financial health score and high price volatility.
The firm noted that Advance Auto Parts’ business has stabilized and improved, though the company still faces significant challenges to meet its 2027 targets. Second-quarter results were approximately in line with expectations that had been adjusted upward following first-quarter results. The company maintains a 20-year track record of consistent dividend payments, currently yielding 1.76%, despite recent challenges. Get deeper insights into AAP’s financial health with InvestingPro, which offers exclusive analysis and 8 additional ProTips.
Comparable sales showed a slight increase of 10 basis points, driven by the Professional segment, while the Do-It-Yourself (DIY) segment continues to experience negative trends. Truist Securities pointed out that DIY trends are "notoriously difficult to shift given the category’s needs-based nature."
Despite reiterating its operating assumptions, Advance Auto Parts lowered its earnings per share guidance to account for additional interest expenses from a recent debt transaction. The research firm believes there is "significant risk" to the company’s expectation of 400-500 basis points of gross margin expansion over the next 10 quarters.
Truist Securities acknowledged that the new management team has stabilized the business and should be able to generate higher margins over time, but maintained its Hold rating while implementing the modest price target increase.
In other recent news, Advance Auto Parts reported its second-quarter 2025 earnings, revealing an adjusted diluted EPS of $0.69, surpassing the forecast of $0.53. This marked a 30.19% surprise for analysts. The company’s revenue reached $2 billion, slightly above the anticipated $1.97 billion, although it represented an 8% decline compared to the previous year. Despite the earnings beat, the company is facing market challenges. Evercore ISI raised its price target for Advance Auto Parts to $60 from $58, maintaining an "In Line" rating. The firm highlighted positive developments in the professional installer segment, noting growth momentum. Meanwhile, DA Davidson lowered its price target to $63 from $65, maintaining a Neutral rating. The firm acknowledged that Advance Auto Parts is in the early stages of a three-year turnaround plan, with several initiatives showing early positive results.
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