On Tuesday, CFRA made an adjustment to AutoZone's (NYSE: NYSE:AZO) stock, raising the price target to $3,650 from the previous $3,300 while keeping a Buy rating on the shares.
The new target reflects an increase of $350 and is based on a forward price-to-earnings (P/E) ratio of 20.5 times for the fiscal year ending in August 2026. This P/E ratio represents a premium over AutoZone's historical multiples.
AutoZone reported earnings per share (EPS) of $32.52 for the November quarter, which was slightly below the consensus estimate of $33.64 and a marginal decrease from the $32.55 reported in the same quarter of the previous year.
The company's performance was affected by weaker-than-expected same-store sales (SSS), which saw a modest 0.3% increase in the domestic market, falling 50 basis points short of the consensus forecast. Despite these challenges, AutoZone's gross margin improved by 20 basis points to 53.0%, exceeding consensus estimates.
Revenue for the quarter was up 2% at $4.28 billion, which was $30 million below the consensus. The EPS estimates for AutoZone have been revised downward by CFRA to $153.30 from $159.50 for fiscal year 2025 and to $178.10 from $183.30 for fiscal year 2026. The adjustments come in the wake of the reported earnings.
While the recent quarter's performance did not meet expectations, AutoZone's management pointed out positive trends toward the end of the period. CFRA reiterated their Buy rating on the stock, citing potential gains from the recent decision by Advance Auto Parts (NYSE:AAP) to close over 700 stores, which could benefit AutoZone as it stands to gain market share. Additionally, CFRA believes AutoZone has a promising growth trajectory in international markets, specifically in Mexico and Brazil.
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