In a report released today, Zachary Fadem from Wells Fargo maintained a Hold rating on Advance Auto Parts (NYSE: AAP), with a price target of $165. The company’s shares opened today at $156.13, close to its 52-week high of $159.50.
Fadem said:
“We view today’s results as obviously encouraging and reflecting both a more favorable industry backdrop as well as AAP’s sales/turnaround initiatives. With investor sentiment warming up to AAP (and the industry) following 3 years of sales declines, we believe momentum is poised to continue with easing y/y compares in 2H, a new buyback in place, and a revised/raised profit forecast that still appears manageable. That said, we believe considerable work remains on a long-term turnaround, as Q2 comps lagged ORLY by 180bps and margins remain a sticking point with AAP’s EBIT gap (albeit improving) 1,100bps below peers (with ~700bps addressable, per AAP). We are raising our PT to $165 (21x our CY19E EPS) reflecting these improvements, yet view risk/reward more balanced over the next 12-18 months, particularly relative to peers owing to AAP’s elevated valuation and heightened execution risk.”
According to TipRanks.com, Fadem is a 4-star analyst with an average return of 11.3% and a 70.1% success rate. Fadem covers the Services sector, focusing on stocks such as National Vision Holdings Inc, Floor & Decor Holdings Inc, and Michaels Companies.
The word on The Street in general, suggests a Moderate Buy analyst consensus rating for Advance Auto Parts with a $151 average price target, implying a -3.3% downside from current levels. In a report released today, Oppenheimer also assigned a Hold rating to the stock.
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Based on Advance Auto Parts’ latest earnings release for the quarter ending April 30, the company reported a quarterly net profit of $137 million. In comparison, last year the company had a net profit of $87.05 million.
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Advance Auto Parts, Inc. engages in the supply and distribution of aftermarket automotive products for professional installers, do-it-yourself customers, and independently owned operators. It offers automotive parts and batteries, accessories and chemicals, and engine maintenance.
