Interesting things happen around earnings reports. AutoZone, Inc. NYSE: AZO) is no different. Forget tariffs, or no tariffs, for a second. After a slight earnings disappointment, AutoZone’s shares fell from $3,826 to $3,695 — a manageable 3.5% drop, but enough of a drop to put the stock in the “disappointing earnings reactions” categories that can send investors and traders alike looking for greener pastures.
Then something happened. AutoZone rose to $3,744.42 and was indicated over $3,750 the following day. It’s not a full recovery. But Wall Street has decided to line up for AutoZone shares with multiple analyst price target hikes. More than a half-dozen, with only two slight price target cuts seen.
BofA Securities recently upgraded AutoZone to Buy from Neutral just a few ahead of earnings, with close to a street-high target of $4,800. The firm reiterated its Buy rating after earnings (and its $4,800 target) based on opportunities for market share gains in both DIY and Pro. The high target is based upon confidence in the company’s recession resilient history, ongoing market share gains in both DIY and Pro, potential inflation benefit from price increases, potentially more favorable used versus new car dynamics, continued Pro tailwind from maturing commercial programs, and also a roll out of hubs and mega hubs.
MULTIPLE TARGET HIKES
AutoZone then scored a half-dozen price target hikes with Buy/Outperform ratings reiterated. These are the calls that were seen:
reiterated as Outperform with price target raised to $4,100 from $3,850 at BMO Capital Markets;
reiterated as Strong Buy with price target raised to $4,200 from $4,000 at Raymond James;
reiterated as Overweight with price target raised to $4,000 from $3,750 at Morgan Stanley;
reiterated as Buy with price target raised to $4,850 from $4,192 at DA Davidson;
reiterated as Buy with price target raised to $4,100 from $3,850 at Guggenheim;
reiterated as Buy with price target raised to $4,255 from $4,000 at Jefferies;
reiterated as Buy with price target raised to $4,260 from $4,025 at UBS.
THE OTTHER SIDE OF THE COIN
There was actually one price target cut. JPMorgan maintained its Overweight rating but its price target was cut to $4,200 from $4,350.
While most other analyst calls were positive, there were two calls that stood out as cautious reports.
Evercore ISI maintained its Outperform rating but trimmed its target to $3,930 from $3,950. This may seem to small of a price target cut to matter but the firm removed AutoZone from its “Strategic outperform” list now that the earnings event has passed. The firm said AutoZone delivered solid topline and share performance at a cost of margin investment in its third quarter. Still, it was referred to as “the best comp in years” driven by commercial growth. The gross margin decline of 80 basis points and EBIT margin compression of 185 basis points were said to be at a near term cost.
AutoZone has a 52-week trading range of $2,728.97 to $3,916.81.
