UBS raises Advance Auto Parts stock price target to $65 on valuation roll forward

Published 12/08/2025, 15:06
UBS raises Advance Auto Parts stock price target to $65 on valuation roll forward

Investing.com - UBS raised its price target on Advance Auto Parts (NYSE:AAP) to $65.00 from $50.00 on Tuesday, while maintaining a Neutral rating on the auto parts retailer. The stock currently trades at $60.14, with InvestingPro data showing a strong 26.5% return over the past six months.

The price target increase reflects UBS rolling its valuation forward, now based on approximately 13 times its revised calendar year 2027 earnings per share estimate of $5.12, compared to the previous target based on calendar year 2026 estimates.

UBS lowered its earnings per share estimates for Advance Auto Parts, citing ongoing uncertainty related to store closures, the scale of the company’s transformation plans, additional interest expense from recently issued senior notes, and uncertain macroeconomic conditions.

Despite these challenges, UBS maintained its price-to-earnings multiple of approximately 13 times, noting that the company is moving past significant store closures and faces both company-specific and industry tailwinds developing in the second half of the year.

Advance Auto Parts currently trades at approximately 22 times next twelve months price-to-earnings ratio, which is about 38% above its three-year historical average of 16 times and 36% above its five-year historical average of 16 times, according to UBS.

In other recent news, Advance Auto Parts announced its preliminary second-quarter 2025 financial results, reporting expected net sales between $1.98 billion and $2.00 billion, with comparable store sales growth ranging from 0.0% to 0.1%. The company anticipates an adjusted operating income margin between 2.8% and 3.0% for the quarter. Additionally, Advance Auto Parts has launched a $1.5 billion senior unsecured notes offering, consisting of two tranches due in 2030 and 2033, guaranteed by its wholly-owned domestic subsidiaries. This move is part of a broader plan to establish a new five-year asset-based loan revolving credit facility of up to $1 billion. The company also priced $1.95 billion in senior notes, divided into two tranches with interest rates of 7.000% and 7.375%, due in 2030 and 2033, respectively. Following these announcements, Citi raised its price target for Advance Auto Parts to $60.00 from $49.00, maintaining a Neutral rating. Similarly, DA Davidson increased its price target to $65.00 from $47.00, also retaining a Neutral rating. Both firms highlighted the company’s recent financial strategies and preliminary results as factors in their assessments.

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