UPDATE: Credit Suisse Reiterates Outperform Rating, Raises PT on AutoZone on Strong Q1 Results

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In a report published Wednesday, Credit Suisse analyst Gary Balter reiterated an Outperform rating on
AutoZone
AZO
, and raised the price target from $550.00 to $680.00. In the report, Credit Suisse noted, “AZO, on paper, is the worse positioned of the three leading public DIY Auto players due to its over 75% exposure to the slower growing DIY segment. Yet a combination of successful expansion into DIFM, expansion of its inventory offering to serve that market, smart working capital management, and its share buyback has allowed the company to consistently deliver double-digit EPS growth. Lower gas prices combined with continued growth in DIFM parts and distribution should allow the company to continue to deliver if not exceed its targeted mid-to-high single-digit EBITDA growth and double-digit EPS growth. While we are not modeling in the strong comp we witnessed in Q1 of 4.5%, the potential to repeat that, given the macro and internal steps, exists and would likely lead to upside to our estimates. We believe a small piece of the comp strength for AZO likely represents some disruption/consolidation at AAP, a natural process as AAP prunes unprofitable or overlapping business. We would assume that ORLY is likely enjoying a similar benefit at this time, but those minor gains do not change our positive view of AAP. We continue to view all three as Outperforms in this environment.” AutoZone closed on Tuesday at $605.81.
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Posted In: Analyst ColorPrice TargetAnalyst RatingsCredit SuisseGary Balter
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