UPDATE: ISI Group Raises Target to $94 on Advance Auto Parts

ISI Group reiterates its Buy rating on Advance Auto Parts AAP and raises its base case to $94 on top line growth from select investments strategy. ISI Group says, "In 2011 RNOA reached 15.7% (+200bps), FCF $560mn (9% yld), and EBIT margins 10.8% +90bps. Our 2012 and 2013 EPS estimates go up by 4% due to higher buybacks, and stabilizing DIY market share. Our Base Case moves to $94 (13.5x our 2013e of $7.00) on the new numbers. A continued narrowing of comps vs peers, with margin expansion room to 12% suggests the valuation gap could narrow (4 points of P/E vs ORLY, 2.5 turns on EV/EBITDAR vs AZO & ORLY)." AAP closed at $85.64 a share on Thursday.