Analysts’ Recommendations for Auto Part Companies



Auto part retailers

In the previous part of this series, we looked at how auto part retailer companies have underperformed the broader market and automakers in 2017. Dismal US auto sales data in the first seven months of 2017 hint at tough times ahead for the auto industry. Similarly, auto part retailers’ sales have stagnated. Let’s look at analysts’ recommendations for the three largest US auto part retailers: O’Reilly Automotive (ORLY), AutoZone (AZO), and Advance Auto Parts (AAP).

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Auto part retailers: August update

According to recent data compiled by Reuters, about 58%, 40%, and 52% of analysts have given “buy” recommendations for ORLY, AZO, and AAP, respectively. Meanwhile, 42%, 56%, and 41% of analysts recommend “hold” for O’Reilly, AutoZone, and Advance Auto Parts stock, respectively. Whereas there were no “sell” recommendation for O’Reilly, 4% and 7% of analysts suggested “sell” for AutoZone and Advance Auto Parts.

Comparing upside potentials

  • O’Reilly Automotive: Analysts’ consensus price target of $227.70 reflects a return potential of ~15% from its market price.
  • AutoZone: The stock is trading at $525.40, reflecting an impressive upside potential of 25.9% from analysts’ target price of $661.41.
  • Advance Auto Parts: Analysts’ price target of $107.75 reflects a return potential of ~13.8% from its market price of $94.66.

Analysts’ targets for auto part retailers are more optimistic than targets for automakers (XLY) such as General Motors (GM) and Ford Motor (F). In the next part, we’ll investigate what could be driving recent pessimism towards Advance Auto Parts stock.


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