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On Thursday, UBS analyst Michael Lasser increased the price target for O’Reilly (NASDAQ:ORLY) Automotive (NASDAQ: ORLY) stock to $1,580 from the previous target of $1,535, while maintaining a Buy rating. With a current market capitalization of $76.75 billion and analyst consensus remaining bullish at 1.9 (where 1 is Strong Buy), the stock appears to be trading above its InvestingPro Fair Value. Lasser’s adjustment followed the company’s first-quarter earnings report, which, despite some challenges, suggested a potential rise in consensus estimates.
O’Reilly Automotive reported operating income for the first quarter of 2025 at $741 million, which did not meet the consensus forecast of $788 million. The shortfall was attributed primarily to higher-than-anticipated Selling, General and Administrative expenses (SG&A), which totaled $1,380 million compared to the forecasted $1,354 million. According to Lasser, this increase in SG&A may be due to early investment spending and possibly growing accruals for liability claims, a situation that was also mentioned in the fourth quarter of 2024.
The company’s comparable store sales growth was a highlight, with a 3.6% increase that not only surpassed O’Reilly’s own forecast of 3.5% but also exceeded the 2.7% market consensus. The performance was also notably higher than the market’s expectation of 2.5% to 3.5%. Lasser pointed out that O’Reilly Automotive’s comp growth was driven by a mid-single digit increase in commercial sales and a low-single digit rise in Do-It-Yourself (DIY) sales. These segments are expected to continue accelerating, bolstered by O’Reilly’s market share gains following the closure of Advance Auto Parts (NYSE:AAP) stores and recent price increases stemming from tariffs.
Lasser’s commentary highlighted the company’s solid comparable store sales and its positioning to outperform against most retailers in the first quarter, with the exception of Costco (NASDAQ:COST). The positive outlook and the raised price target reflect confidence in O’Reilly Automotive’s market performance and growth trajectory.
In other recent news, O’Reilly Automotive has been the focus of several analyst updates and financial developments. Evercore ISI raised its price target for O’Reilly Automotive to $1,470, maintaining an Outperform rating, and expects the company to report favorable first-quarter results. The firm’s projections for comparable store sales and earnings per share slightly exceed consensus estimates. TD Cowen also increased its price target for O’Reilly Automotive to $1,600, though it adjusted the first-quarter earnings per share estimate to $9.75 due to anticipated revenue challenges. Despite this, the outlook for the subsequent quarters remains optimistic, with expectations of strong comparable store sales and improved margins.
Guggenheim reiterated its Buy rating with a $1,475 price target, highlighting O’Reilly Automotive’s strong positioning amid rising new car prices due to tariffs. Additionally, the company has expanded its credit facility to $2.25 billion, enhancing its financial flexibility. This expansion includes a $200 million sub-limit for letters of credit and a $75 million sub-limit for swing line borrowings. The company also increased its commercial paper program to $2.25 billion.
Furthermore, O’Reilly Automotive, along with other auto parts retailers, saw a share price increase following the announcement of a 25% tariff on foreign-made vehicles. This tariff is expected to extend the lifecycle of existing vehicles, potentially increasing demand for auto parts. These developments indicate a dynamic period for O’Reilly Automotive, with analysts and market conditions suggesting potential growth opportunities.
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