Last month, AutoZone Inc NYSE: AZO experienced a dip in their share price following a revenue miss in their fiscal Q3 report. However, this dip is now being seen as a solid buying opportunity, especially considering the stock’s potential to soon reach the $3,000 mark. AutoZone has also received two significant upgrades from Evercore ISI and UBS, highlighting the company’s strong market position and potential for profitable growth. Furthermore, the recent approval of a $2 billion share buyback program indicates that AutoZone’s leadership believes the stock is undervalued.
Key Points
1. Last month’s dip in AutoZone’s stock price, following a revenue miss in their fiscal Q3 report, is seen as a solid buying opportunity.
2. AutoZone has received two significant upgrades from Evercore ISI and UBS, with analysts highlighting the company’s potential for profitable market share growth and margin recovery.
3. In addition to the upgrades, AutoZone announced a fresh $2 billion share buyback program, signaling confidence in the stock and providing investors with added confidence.
Last month, AutoZone Inc (NYSE: AZO) experienced a dip in their shares following a revenue miss in their fiscal Q3 report. This dip threatened to halt the rally that had been ongoing since March 2021, during which their shares had risen by 140% and were approaching the $3,000 mark. However, this dip now appears to be a solid buying opportunity, as AutoZone shares are again trending higher and could soon reach the $3,000 milestone.
One reason for this positive outlook is that AutoZone has recently received two significant upgrades. Evercore ISI upgraded its rating to Outperform from Market Perform, citing AutoZone’s strong position in the favorable auto aftermarket and its potential for market share growth and stable margins. They believe that while immediate double-digit growth may not be expected, achieving decent single-digit growth in the near term is feasible, with the possibility of further acceleration over time. UBS also upgraded their rating on AutoZone shares from Neutral to Buy, emphasizing the company’s improving profit outlook and market share potential.
These upgrades reflect the belief that AutoZone has the ability to navigate supply chain issues and recover from recent headwinds, which impacted their Q3 revenue. Both Evercore ISI and UBS have set higher price targets for AutoZone shares, with the potential for a 20% increase and a value close to $3,000.
In addition to the upgrades, AutoZone’s shares are expected to benefit from a fresh $2 billion share buyback program that was announced last week. This demonstrates the company’s confidence in its shares being undervalued and provides extra confidence for potential investors.
Overall, these positive developments and increased buying interest indicate that AutoZone shares are on the path to undoing the damage from last month’s dip. Despite the higher price tag, AutoZone still appears to be a good deal, especially considering its low price-to-earnings ratio of 19. Furthermore, industry tailwinds, such as above-average inflation and increased miles driven in the U.S., bode well for the company’s long-term outlook.
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With AutoZone shares trending higher and positive factors in play, it seems likely that the $3,000 mark could soon be within reach for the company.
