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Most Analysts Suggest a ‘Hold’ on AutoZone before Q3 2018 Report

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Wall Street on AutoZone stock

According to Reuters’ latest consensus data, 46% of analysts covering AutoZone (AZO) gave its stock a “buy” recommendation. 50% of these analysts recommended a “hold,” while only one out of the total 24 analysts gave it a “sell” rating.

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Consensus target

As of May 16, analysts’ consensus target price for AutoZone stock was $774.06 for the next 12 months, which reflected upside potential of about 20% from the market price of $647.93. About three months ago, analysts’ consensus target for AutoZone stock was much higher at $809.90.

Despite Autozone’s mixed profit margins, analysts’ high expectations from its DIY (do-it-yourself) segment could be the reason why many analysts are maintaining a neutral to positive view. It’s important to note that AZO’s business model is such that it doesn’t require huge investments to drive growth unlike in the case of auto manufacturers.

Investors should pay attention to analysts’ views, as they could impact a company’s stock. If a popular Wall Street analyst changes his or her opinion, a significant movement in the stock price could occur.

Peer comparison

In comparison, analysts’ consensus “buy” recommendations for other auto companies and auto parts sellers (XLY) with their expected 12-month upside potential were as follows:

  • About 54% of a total of 24 analysts recommended a “buy” on Advance Auto Parts (AAP) with an upside potential of ~3%.
  • 68% of analysts gave O’Reilly Automotive (ORLY) a “buy” with about 7% upside potential.
  • Only 13% of analysts gave Ford (F) stock a “buy” with about 8% upside potential.
  • About 42% of analysts gave Fiat Chrysler (FCAU) a “buy” with an impressive 45% upside potential.

Continue to the next part where we’ll take a look at AutoZone’s valuation multiples ahead of its Q3 earnings event.

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