On Wednesday, DA Davidson maintained a Neutral rating on AutoZone (NYSE:AZO) with a steady price target of $3,025.00. The firm observed that despite missing consensus comparable sales forecasts three times in 2024, including today, AutoZone's shares have climbed by 16.1% as of midday. This increase is notable although it falls short of the S&P 500's 20.1% gain. However, it surpasses the advances of the retail sector's XRT and the S&P Equal Weighted index, which have risen by 6.5% and 12.7%, respectively.
The analyst noted that AutoZone's stock has demonstrated resilience throughout the year. Even with the missed sales expectations, the stock's performance has been relatively strong compared to certain benchmarks. The firm anticipates that the company will face several challenges in the fiscal year 2025, both from external and internal factors, which are likely to result in a lower growth rate than usual.
Despite the projected headwinds for the upcoming fiscal year, DA Davidson highlighted a positive aspect of AutoZone's business. The company's commercial trends have shown improvement, accelerating beyond the previous quarter's pace. This segment of AutoZone's business is still not fully tapped, suggesting potential for growth.
AutoZone's stock performance has been a topic of interest, given its ability to stay afloat amid missed sales targets. The company's resilience in the face of these shortfalls and the broader market context contributes to DA Davidson's assessment and the reaffirmed Neutral rating.
In summary, while AutoZone has managed to keep its stock price on an upward trajectory in 2024, DA Davidson cautions investors about the anticipated challenges that may dampen growth in the next fiscal year. Nonetheless, the firm recognizes the strengthening commercial trends as a key area that could support AutoZone's performance moving forward.
In other recent news, AutoZone has been the subject of several analyst adjustments following its fiscal fourth quarter results. Morgan Stanley raised its price target from $3,038 to $3,125, maintaining an Overweight rating, while Citi reduced its target to $3,500, but also maintained a Buy rating. CFRA increased its target to $3,300, holding onto a Buy rating, while TD Cowen maintained a Buy rating with a price target of $3,450. Evercore ISI adjusted its price target to $3,350, continuing with its Outperform rating.
AutoZone's fiscal fourth quarter saw an 11% increase in earnings per share and a 9% rise in revenue, reaching $6.21 billion, despite falling short of expectations. Amid these financial results, AutoZone announced the appointment of Kenneth Jaycox as Senior Vice President, Commercial, Customer Satisfaction.
However, the company is currently under investigation by U.S. lawmakers for potential tariff evasion related to purchases from a Chinese company, Qingdao Sunsong.
InvestingPro Insights
AutoZone's recent stock performance has caught the eye of investors and analysts alike. With a market capitalization of $51.91 billion, the company has been actively managing its share count, as indicated by one of the InvestingPro Tips which notes that management has been aggressively buying back shares. This could be a factor contributing to the stock's resilience. Furthermore, AutoZone's P/E ratio stands at 20.21, suggesting that the stock is trading at a premium relative to its near-term earnings growth.
Another InvestingPro Tip highlights that AutoZone generally trades with low price volatility, which might appeal to investors seeking stability in a portfolio. Additionally, the company's revenue growth over the last twelve months as of Q3 2024 was 5.03%, with a solid gross profit margin of 53.18%. These figures underscore the company's ability to maintain profitability, as AutoZone has been profitable over the last twelve months and analysts predict it will remain profitable this year.
It's worth noting that AutoZone does not pay a dividend to shareholders, which could influence investment decisions for those focused on income-generating stocks. For investors interested in further details and additional tips, there are nine more InvestingPro Tips available that provide deeper insights into AutoZone's financial health and stock performance.
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