UPDATE: Stifel Upgrades AutoZone Following Investor Meetings

Stifel upgraded AutoZone AZO to Buy after CFO Bill Giles and Treasurer Brian Campbell met with investors.

Commenting on the weather, analyst David Schick wrote, “AZO experienced stronger trends in the Northeast and Midwest last Q driven by colder winter weather and easier compares y/y. The West Coast underperformed relative to strength in these regions (not as much upside from weather). Management remains optimistic about a continuation of parts breakage with hot summer weather.”

Schick also thinks AutoZone has an opportunity to expand with commercial programs, specifically, industry consolidation.

“Older commercial stores are strong, but productivity of those older locations is offset by self-cannibalization when new programs open nearby. Commercial is 17% of sales and 76% of stores have commercial programs.”

Stifel’s $570 price target is based on a 10.5 times EV/EBITDA multiple. This ratio is about 30 percent higher than comparable companies that Stifel covers.