On Friday, Argus increased the price target for AutoZone (NYSE: NYSE:AZO) to $3,300 from the previous target of $3,016. The firm retained a Buy rating on the stock. The move follows a period of strong performance by the company, with earnings surpassing Wall Street expectations for 15 consecutive quarters.
AutoZone, a leading retailer and distributor of automotive replacement parts and accessories, has seen a significant rebound in earnings since the pandemic's impact.
The company has been actively working to boost its commercial sales by opening new 'mega-hub' locations, which offer a wider range of parts. AutoZone's strategic expansion into Mexico and Brazil is part of its plan to capitalize on these underpenetrated markets.
The firm's analysis suggests that as the average age of vehicles on the road increases, AutoZone is positioned to gain further market share in the commercial segment and grow its international sales.
From a technical perspective, Argus explains that AutoZone's stock has demonstrated a long-term bullish pattern, showing higher highs and higher lows since April 2018, excluding the pandemic-induced selloff. The company's stock is currently trading at a multiple that is consistent with the average of its peers, based on Argus's FY24 earnings per share (EPS) forecast.
The revised price target of $3,300 indicates a forward FY24 price-to-earnings (P/E) ratio of 21.5 times, according to the firm's analysis.
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