© Reuters.
On Tuesday, AutoZone Inc. (NYSE: NYSE:) received a price target increase from CFRA, with the new target set at $3,200, up from the previous $3,000, while the firm maintained a Buy rating on the stock. The adjustment follows AutoZone’s impressive fiscal second-quarter earnings report, which surpassed analysts’ expectations, particularly due to robust margins and international sales growth.
CFRA’s revised price target is based on an anticipated price-to-earnings (P/E) ratio of 19.0x for fiscal year (FY) 2025, which ends in August. This represents a premium over AutoZone’s five-year mean forward P/E of 17.8x.
The firm justifies this higher valuation with the auto parts retailer’s expanding international presence. Moreover, CFRA has increased its earnings per share (EPS) estimates for AutoZone to $154.85 from $152.65 for FY 2024, and to $168.00 from $163.20 for FY 2025.
AutoZone’s fiscal second-quarter earnings, reported earlier, showed an EPS of $28.89, a 17% increase over the prior year’s $24.64 and well above the consensus estimate of $26.50. This earnings beat was largely attributed to stronger-than-expected profit margins.
Revenue for the quarter grew 4.6% to $3.86 billion, marginally topping the consensus by $10 million, driven by a 3.0% rise in same-store sales (SSS) and a gross margin expansion of 160 basis points to 53.9%, which was 100 basis points ahead of consensus.
The company’s international SSS saw an impressive surge of 23.9%, which significantly contributed to the overall performance and helped balance the modest domestic SSS growth of 0.3%. AutoZone has been consistently delivering strong financial results, as highlighted by the fact that this quarter marked its 24th consecutive earnings beat.
CFRA notes AutoZone’s robust international growth as a key factor in their positive outlook, along with the aging U.S. vehicle fleet, which averaged 12.5 years in 2023, likely to bolster domestic business.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
This story originally appeared on Investing
