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JPMorgan Upgrades O'Reilly Ahead Of Winter's Harsh Driving Conditions

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JPMorgan Upgrades O'Reilly Ahead Of Winter's Harsh Driving Conditions

O’Reilly Automotive Inc (NASDAQ: ORLY) is up 62 percent year-over-year, and one team of analysts expects the run to accelerate.

The Rating

JPMorgan upgraded O’Reilly to Overweight and increased their price target from $311 to $398.

The Thesis

The analysts derived optimism from strength in the broader industry, the firm’s fundamentals, and its do-it-for-me segment, which comprises 43 percent of sales.

By their estimates, O’Reilly’s large supply chain well positions it for market-share expansion, and 2019 through 2021 are expected to see an uptick in aging vehicles with repair needs. At the same time, a colder, snowier winter could drive early demand for seasonal items and heighten demand for maintenance-related parts.

“Moreover, positioning ahead of likely slowing consumption in 2019 after the tax reform-aided pace of the past year, higher rates, and heightened tariff risk, we like the autoparts space (and ORLY's perch) relative to others in our coverage given its failure/maintenance-driven demand and limited price transparency in the DIFM channel,” they wrote in a note.

Overall, JPMorgan sees sustainable earnings-per-share growth with earnings upside. Accordingly, it increased third-quarter same-store-sales forecasts above the 3.6-percent consensus to 4 percent.

Price Action

At time of publication, O'Reilly shares traded up 1 percent to $342.10.

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Photo credit: Michael Barera, from Wikimedia Commons

Latest Ratings for ORLY

DateFirmActionFromTo
Jul 2019MaintainsOverweight
Jul 2019MaintainsStrong Buy
Jul 2019Initiates Coverage OnBuy

View More Analyst Ratings for ORLY
View the Latest Analyst Ratings

Posted-In: JPMorganAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

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