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Most Analysts Are Positive on AAP Stock before Q3 Earnings

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Analysts on Advance Auto Parts

According to the latest consensus compiled by Reuters, 52% of the 23 analysts covering Advance Auto Parts (AAP) gave its stock “buy” ratings. The remaining 48% of these analysts were recommending a “hold,” while no surveyed Wall Street analyst suggested a “sell.”

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Consensus price target

As of November 7, analysts’ consensus 12-month target price for AAP’s stock was $172.44. This price target reflected minor upside potential of 1.1% from its market price of $170.51. About three months ago, only 8% of analysts were recommending a “sell” on Advance Auto Parts with a consensus price target of $133.25, lower than the target price now.

The recent recovery in AAP’s revenue growth rate, its expanding profit margins, and its large chain of stores could continue to drive growth in 2018. In addition, the company’s improved 2018 outlook during its second-quarter earnings event could keep investors’ sentiments positive. AAP now expects its full-year 2018 operating margin to be 7.5% as compared to its original guidance of 7.3%.

Ratings on peers

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

  • ~48% of Wall Street analysts gave AutoZone (AZO) a “buy” recommendation with ~1.9% upside potential.
  • ~73% of analysts gave O’Reilly Automotive (ORLY) a “buy” with about 4.3% upside potential.
  • Only 19% of analysts give Ford Motor Company (F) a “buy” with about 3.0% upside potential.
  • 57% of analysts gave General Motors (GM) stock a “buy” with ~3% positive return potential.
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