Advance Auto Parts Earnings to More Than Double in Q1; Target Price $221

The leading automotive aftermarket parts retailer Advance Auto Parts is expected to report its first-quarter earnings of $3.05 per share, which represents year-over-year growth of over 235% from $0.91 per share seen in the same period a year ago.

The company would post quarterly revenue of $3.31 billion, up from $2.70 billion seen in the same period a year ago. The company forecasts full-year 2021 net sales in the range of $10.1-$10.3 billion.

The Raleigh, North Carolina-based company is scheduled to issue its quarterly earnings results before the market opens on Wednesday, June 2. Advance Auto Parts shares traded 2.4% higher at $194.26 on Tuesday. The stock rose over 20% so far this year.

Analyst Comments

“Advance Auto Parts (AAP) operates in a defensive (recession-resistant) category and has one of the largest long-term EBIT margin expansion opportunities in our coverage (we estimate 300-400 bps over time). COVID-19 slowed parts of AAP’s transformation but gross and EBIT margin upside from internal initiatives is still expected beginning in 2021,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“Significant and improving FCF generation plus share repurchases likely to enhance EPS growth. We think the combination of a defensive category, AAP’s progress generating stable top-line growth, and significant margin upside all make for a positive risk/reward skew.”

Advance Auto Parts Stock Price Forecast

Fifteen analysts who offered stock ratings for Advance Auto Parts in the last three months forecast the average price in 12 months of $221.38 with a high forecast of $235.00 and a low forecast of $200.00.

The average price target represents a 14.04% increase from the last price of $194.12. Of those 15 analysts, 12 rated “Buy”, three rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast to $215 with a high of $275 under a bull scenario and $145 under the worst-case scenario. The firm gave an “Overweight” rating on the health care company’s stock.

Several other analysts have also updated their stock outlook. BTIG Research raised shares from a neutral rating to a buy rating and set a $140 price objective. SVB Leerink raised their price target to $128 from $115 and gave the stock a market perform rating. Raymond James raised their price target to $130 from $126 and gave the stock an outperform rating.

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