UPDATE: J.P. Morgan Reiterates Neutral Rating, Lowers PT on Advance Auto Parts
In a report published Friday, J.P. Morgan & Co. reiterated its Neutral rating on Advance Auto Parts (NYSE: AAP), but lowered its price target from $76.00 to $74.00.
J.P. Morgan noted, “Following AAP's second quarter and recent commentary from management, we are adjusting our estimates to reflect the overall slower pace of growth for the industry. AAP has suffered from high exposure to the weather impacted Northeast (16% of stores vs. 11% for AZO and nil for ORLY), uneven execution, and some relative structural deficiencies compared to its competitors. Looking forward, management is optimistic that DIFM growth will normalize in the 2-4% range and weather impacts normalize over time. Specific to AAP, accelerated store growth (4% in 2013 vs. 3% in 2012), their new state-of-the-art DC, and ~1,000 inventory upgrades will help drive same-store sales. In the more near term, AAP is guiding comps in the negative LSD range for 2H12 as the weather pull-forward moderates,though their outlook was moderated due to the election and share of wallet uncertainty in the Christmas season.”
Advance Auto Parts closed on Thursday at $71.32.
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Tags: J.P. Morgan & Co.