BTIG: Advance Auto Parts Weak Despite Favorable Conditions
Shares of Advance Auto Parts, Inc. (NYSE: AAP) are liable to trade lower Thursday following an initiation at sell by BTIG.
Analyst Alan Rifkin starts by noting weakness in the stock despite favorable industry conditions. "Record miles driven and vehicle age, low gas prices are very positive, yet AAP is unable to generate positive comps. We expect comps to weaken in 2016."
Other issues noted include a lack of synergies several years following the acquisition of General Parts International and unrealistically high 2016 margin expectations. Advance Auto Parts forecast 12 percent EBIT margin in 2016 versus 10.2 percent in 2015.
Rifkin put a $120 price target on the stock versus Wednesday's close of $153.34. This implies 21.7 percent downside.
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