UPDATE: Wedbush Upgrades Advance Auto Parts Following Announcement of General Parts Acquisition
In a report published Thursday, Wedbush analyst Seth Basham upgraded the rating on Advance Auto Parts (NYSE: AAP) from Underperform to Outperform, and raised the price target from $70.00 to $120.00.
In the report, Wedbush noted, “This morning, AAP announced what we view as a transformational $2.04b acquisition of privately-held General Parts Inc, with revenues of ~$2.8b or 45% of AAP's $6.4b. The acquisition is not only transformational for its relative size and the cost synergies that likely will ensue, but also for the complementary nature of GPI's assets to AAP. GPI gives AAP delivery scale, geographic breadth and new market opportunities, in our view, while also giving it a much bigger presence in the faster-growing commercial segment. As when ORLY acquired CSK, we believe it will take time for investors to get truly comfortable with the potential of this transaction and the stock should rise into a fair valuation as that happens.”
Advance Auto Parts closed on Wednesday at $96.16.
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.