On Friday, Evercore ISI maintained its In Line rating on Genuine Parts (NYSE:GPC), with a steady price target of $150.00. The firm issued a negative tactical trading alert ahead of the company's earnings report due on July 23, signaling potential near-term downside to $130, which would mark a high single-digit percentage drop.
The alert anticipates a possible second-quarter earnings per share (EPS) shortfall and a downward revision of the full-year revenue and EPS guidance. Previously, the company had projected a growth outlook of 3-5%, which could now be adjusted to 1-3%, with the EPS forecast potentially tightening around the lower end of the prior range of $9.80-$9.95.
Evercore ISI has reduced its revenue forecast for Genuine Parts' Automotive and Industrial segments for both the second quarter and the second half of 2024. This revision also includes a 1.5% cut in EPS expectations to $9.75.
The firm's analysis suggests that Genuine Parts' Automotive business may be affected by broader consumer slowdown trends and a cold, wet start to the second quarter, which likely resulted in negative comparable sales against the 0.5% growth seen in the first quarter.
For the Industrial segment, the second-quarter organic growth outlook has been lowered from an initial 2.5% increase to a 0.7% decrease. This adjustment reflects persistent sluggishness in Industrial Production, insights from fieldwork by David Raso, an Evercore ISI Industrial & Machinery Analyst, and early July earnings reports from competitor MSC Industrial (NYSE:MSM) Direct Co., which showed a decline in revenue and margin compression.
Evercore ISI expressed concerns that Genuine Parts might revise its revenue guidance downward for both the Auto and Industrial Divisions in light of the upcoming earnings announcement.
Such a move could result in a negative impact on the company's selling, general, and administrative (SG&A) leverage.
In other recent news, Genuine Parts Company (NYSE:GPC) has made significant strides in the automotive parts sector. The company has expanded its U.S. Automotive business with the acquisition of Motor Parts & Equipment Corporation (MPEC), marking a major consolidation within the industry.
This strategic move is expected to strengthen Genuine Parts Company's market presence in the Midwest and enhance the service and value offered to customers in these regions.
In addition to this, Genuine Parts Company has made key changes to its leadership team. William P. Stengel, II has been appointed as the new president and CEO, and Charles "Chuck" K. Stevens, a former executive vice president and chief financial officer of General Motors Company (NYSE:GM), has been elected to the board of directors.
Truist Securities has maintained a Buy rating on Genuine Parts stock and increased the price target to $183 from $167, following the company's first-quarter performance. The company reported a slight increase in total sales to $5.8 billion and an uptick in adjusted earnings per share, leading to a raise in its full-year earnings per share (EPS) projections. Genuine Parts Company anticipates growth across its Automotive and Industrial segments, demonstrating confidence in its strategic plans despite the shifting macroeconomic landscape.
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