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On Wednesday, UBS analyst Michael Lasser increased the price target for AutoZone (NYSE:AZO) shares to $4,025 from the previous target of $3,875, while reiterating a Buy rating for the company. Currently trading at $3,503.73, the stock has shown remarkable stability, as confirmed by InvestingPro data indicating historically low price volatility. Lasser’s assessment followed AutoZone’s second-quarter results, which he believes bolster the positive outlook for the auto parts retailer.
Lasser stated that AutoZone’s recent performance underpins the company’s ongoing success with its strategic growth initiatives. The company’s solid execution is reflected in its impressive 53.13% gross profit margin and 4.72% revenue growth over the last twelve months. These initiatives are expected to continue driving market share gains and support top-line growth, even in the event of a slowdown in industry growth. The analyst anticipates that these gains will lead to consistent EBIT growth, which in turn should fuel share buybacks and support growth in earnings per share (EPS).
The UBS analyst pointed out that AutoZone’s earnings algorithm remains stable amidst a volatile retail environment, a factor that should merit a higher valuation multiple. He noted that AutoZone is currently trading at approximately 21 times the consensus next twelve months (NTM) EPS, which aligns with one standard deviation above its five-year mean NTM PE multiple of around 17 times.
In contrast to its own historical valuation, AutoZone’s stock is still trading at a roughly 30% discount compared to the industry leader O’Reilly Automotive (NASDAQ:ORLY), which is trading at about 30 times NTM PE. This discount is notably larger than the five-year mean discount of 21%. Lasser’s commentary suggests an expectation that AutoZone’s valuation could rise as the company continues to execute on its growth strategies and as its financial performance gains recognition in the market.
In other recent news, AutoZone has seen multiple updates from analysts regarding its stock price targets and company performance. Raymond (NSE:RYMD) James increased the price target to $4,000, maintaining a Strong Buy rating, following AutoZone’s second-quarter fiscal year 2025 results. The report highlighted the company’s growth trajectory, particularly in the commercial segment, and plans to expand Mega-Hub stores. Similarly, TD Cowen raised the price target to $3,900, with a Buy rating, emphasizing AutoZone’s strategic investments in the Do-It-For-Me (DIFM) segment. Truist Securities also adjusted its price target to $3,841, attributing the positive momentum to improved sales trends and the potential impact of tariffs on sales.
BMO Capital Markets increased its price target to $3,850, citing AutoZone’s strategies to expand market presence despite a slight miss in recent quarter results due to adverse weather. DA Davidson raised its target to $3,500, maintaining a Neutral rating, and noted AutoZone’s resilience amidst currency fluctuation challenges. The analysts collectively underscore AutoZone’s strategic initiatives, including growth investments and market share expansion, as key factors in their positive outlooks.
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