O'Reilly A Buy Worth $300, Says Sterne Agee CRT

On Tuesday, Sterne Agee upgraded O'Reilly Automotive Inc ORLY to Buy from Neutral rating with a price target of $300. The firm sees O'Reilly's nearly 15 percent shares pullback from early November's highs as an "attractive" entry point.

"The auto aftermarket is well positioned for another strong year in 2016, a function of strong industry fundamentals, macro drivers, vehicle fleet dynamics and further consolidation," the firm commented.

"ORLY offers consistent share gains, expanding margins, organic growth opportunities, and significant financial flexibility for accretive M&A and increased buybacks."

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'Defensive, Counter-Cyclical'

Sterne Agee believes that O'Reilly is the "best operator" in a defensive retail sub-sector.

During recessionary periods, the firm noted that the auto aftermarket retail stocks tend to outperform. For O'Reilly investors, Sterne Agee indicated that the stock "specifically" outperformed the S&P 500 and hardlines retail by 38 percent and 20 percent, respectively, during the same period.

"The auto aftermarket retailers operate in a mild competitive environment that is largely protected from threats of e-commerce and warehouse clubs due to a emphasis within its customer base on service and parts availability, with price being secondary," the firm also commented.

O'Reilly EPS value is presently at $8.75, and the stock was, at the time of this publication, seen trading up 1.89 percent at $248.50.