On Wednesday, Mizuho (NYSE:MFG) Securities maintained their Outperform rating on AutoZone (NYSE:NYSE:AZO) and increased their price target to $3,600 from $3,350. Currently trading at $3,347.16 with a market capitalization of $56.49 billion, AutoZone appears slightly overvalued according to InvestingPro analysis.
The adjustment follows AutoZone's recent conference call, which left analysts with a positive outlook on the company's stock trajectory, despite recent underwhelming performance and a growing valuation.
AutoZone's management highlighted several key points during the call. First, they noted an improvement in comparable store sales trends exiting the first quarter, particularly in the commercial sector, which benefited from colder weather conditions.
The company's revenue grew 5.19% in the last twelve months, and InvestingPro data shows a strong financial health score of GOOD. Additionally, AutoZone announced plans to expand its megahub facilities, raising the target from over 200 to approximately 300. This expansion means that around 7% of domestic stores will now have access to a more extensive inventory of hard parts.
The company's management also addressed competition from Walmart (NYSE:WMT), which has been increasing the number of auto parts stock keeping units (SKUs) on its marketplace. AutoZone's stance on this development aligns with feedback from a previous meeting with O'Reilly (NASDAQ:ORLY) Automotive, indicating no significant concern over Walmart's strategy.
Tariffs were identified as a potential catalyst for the company's future performance. The analyst's statement concluded with an affirmation of the raised price target, reflecting confidence in AutoZone's path forward amidst the current market conditions.
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