Citi Initiates Coverage on Advance Auto Parts (AAP) with a Buy
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Citi initiates coverage on Advance Auto Parts Inc (NYSE: AAP) with a Buy. Price target $35.
Citi analyst says, "Although AAP has been negatively impacted by the economic downturn (flat comp store sales trends); we think the recent stock pullback is overdone. Based on ests from CIR's Auto Analyst, Itay Michaeli, we think the est. slowdown in new car growth for '09 from a tougher economic environment and tighter credit should benefit AAP...AAP is currently trading at a 35% discount to its avg P/E multiple. We estimate AAP's EPS could grow 11.6% on avg over the next few yrs, driven by growth in DIFM and share repurchases, which should justify multiple expansion. We think current levels provide an attractive entry point for investors."
Advance Auto Parts, Inc. (Advance) operates within the United States automotive aftermarket industry, which includes replacement parts (excluding tires), accessories, maintenance items, batteries and automotive chemicals for cars and light trucks (pickup trucks, vans, minivans and sport utility vehicles).
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