Mizuho has maintained its Outperform rating on AutoZone (NYSE: NYSE:AZO) and increased the price target to $3,350 from $3,280.
The adjustment follows AutoZone's slightly lower trading after a modest fourth-quarter performance that ended in August, coupled with what was perceived as positive commentary during the company's earnings call.
AutoZone's stock resilience, despite a softer quarterly report, has been attributed to several factors.
Mizuho's analysis suggests that confidence in the company's commercial sales is expected to pick up, projecting a mid-single-digit percentage growth rate throughout the 2025 fiscal year.
Additionally, the firm plans to expedite the construction of more than 20 megahub locations next year, with around 70 potential sites currently in the real estate pipeline. This expansion is anticipated to enhance delivery speed and parts availability.
Mizuho also highlighted the potential for tariffs to revive parts inflation to more normal levels, in the low-single-digit percentage range. This could serve as a catalyst for the company's growth. The firm's commentary suggests an optimistic outlook for AutoZone's future performance and encourages investors to buy shares amidst any short-term market fluctuations.
In other recent news, AutoZone reported an 11% increase in earnings per share and a 9% rise in revenue, reaching $6.21 billion, despite falling short of expectations. Despite the missed sales forecasts, DA Davidson maintained a Neutral rating on AutoZone, while Morgan Stanley raised its price target from $3,038 to $3,125, maintaining an Overweight rating.
On the other hand, 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.
AutoZone's commercial trends have shown improvement, accelerating beyond the previous quarter's pace. 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 strategic initiatives and Mizuho's positive outlook are mirrored by its recent financial performance and market behavior. According to InvestingPro data, AutoZone boasts a solid market capitalization of $51.91 billion, reflecting its significant presence in the industry. The company's P/E ratio stands at 20.21, which, while indicating a premium valuation, aligns with the company's stable earnings profile, as evidenced by a P/E ratio of 19.63 over the last twelve months as of Q3 2024. Moreover, AutoZone has exhibited consistent revenue growth, with a 5.03% increase over the last twelve months, underscoring its operational efficiency and market expansion efforts.
InvestingPro Tips further reveal that AutoZone's management has been actively involved in share buybacks, showcasing confidence in the company's value proposition. Additionally, analysts predict profitability for the company this year, bolstered by a track record of profitability over the last twelve months. These factors, combined with a high return over the last decade and strong performance over the past five years, suggest that AutoZone is poised for sustained growth. For investors seeking more detailed analysis, InvestingPro features additional tips on AutoZone, which can be explored for a comprehensive investment strategy.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.