Market Overview

Credit Suisse Constructive On Advance Auto Parts After Q4 Beat

Share:
Credit Suisse Constructive On Advance Auto Parts After Q4 Beat

Advance Auto Parts, Inc. (NYSE: AAP) reported better-than-expected fourth-quarter adjusted earnings per share Wednesday, notwithstanding a 2.2-percent drop in net sales.

The Analyst

Credit Suisse analyst Seth Sigman maintained his Outperform rating on Advanced Auto Parts shares and increased the price target from $100 to $122, suggesting roughly 10-percent upside from current levels.

The Thesis

Lower selling, general and administrative expenses and some bright spots in gross margin Q4 indicate progress, Sigman said in a Monday note. The company is moving ahead with end-to-end supply chain work while pursuing strategic product initiatives, including a partnership with Interstate, the analyst said.

Sigman said he sees improvement in underlying sales trends, with the momentum carrying into 2018. Credit Suisse is constructive on the opportunity for the company following the Q4 print, he said. 

The guidance feels appropriate — and "potentially conservative" — in light of opportunities for upside to comps, margin assumptions and buybacks, Sigman said. Advanced Auto Parts' material cost reductions seem to be ramping, the analyst said. 

Credit Suisse raised its 2018 earnings per share estimate for Advance Auto Parts from $6.03 to $6.44, with flattish comps and a 10-basis-point improvement in EBIT margin. The research firm lifted its 2019 estimate from $6.93 to $7.44 on the basis of 1-percent comps and a 60-basis-point margin expansion.

The Price Action

Advance Auto Parts shares are down about 31 percent over the past year.

At the time of writing, the shares were up 1.67 percent at $112.41. 

Related Links:

Which Is A Better Investment: Automakers, Auto Suppliers Or Car Parts/Service Providers?

Shifting Gears On Auto Parts Stores: AutoZone, Advance Auto And O'Reilly's Downgraded

Latest Ratings for AAP

DateFirmActionFromTo
Nov 2020Morgan StanleyMaintainsOverweight
Oct 2020Raymond JamesUpgradesMarket PerformOutperform
Oct 2020JP MorganUpgradesNeutralOverweight

View More Analyst Ratings for AAP
View the Latest Analyst Ratings

 

Related Articles (AAP)

View Comments and Join the Discussion!

Posted-In: Auto Parts Credit Suisse retail Seth SigmanAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
ABSTNeedhamMaintains18.0
ABNBTruist SecuritiesInitiates Coverage On154.0
ACCDSVB LeerinkMaintains56.0
CSTLSVB LeerinkMaintains80.0
TSLAWedbushMaintains950.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com