O'Reilly Automotive Added To JPMorgan Analyst's 'Focus List'

Among the multiple major players in the auto parts sector, O'Reilly Automotive Inc ORLY stands out to benefit the most from a "weather deep dive" analysis, according to JPMorgan.

The Analyst

JPMorgan's Christopher Horvers maintains an Overweight rating on O'Reilly Automotive with a $398 price target and is now included in the firm's "Analyst Focus List."

The Thesis

Weather is a key factor in determining auto parts demand in terms of both "in the moment" (i.e., freezing weather prompts battery failure) and a lagged impact (repairs from salt on roads or corrosion), Horvers said in a research report. The research firm's analysis of weather trends found the following:

• 2019 snowfall was down year-over-year in the northeast and up in north central. Based on a geographical exposure, O'Reilly Automotive is best positioned to take advantage of the 2019 "solid but not as good as 2018" snow trends.
• 2018 summer was "good overall," but current forecasts call for a "relatively cooler" summer, especially in the west where O'Reilly has strong exposure.
• O'Reilly's favorable geographic exposure should help the company regain the "best comp crown" in the group.

Price Action

Shares of O'Reilly Automotive traded higher by 2.5 percent to $385.89 Monday.

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Photo credit: Michael Barera, from Wikimedia Commons