Citi Initiates Coverage on AutoZone (AZO) with a Buy

November 17, 2008 8:41 AM EST

Citi initiates coverage on AutoZone Inc. (NYSE: AZO) with a Buy. Price target $146.

Citi analyst says, "Although AZO 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 slow down in new car growth for '09 from a tougher economic environment and tighter credit, should benefit AZO over the next several quarters...AZO is currently trading at a discount (~19%) to its 3yr average P/E as a result of the difficult macro environment. However, we think there is significant upside in the stock as we expect current industry trends to help drive sales and a continued aggressive share buy back program to drive EPS. Therefore, we think this is an attractive entry point for investors."

AutoZone, Inc. is a specialty retailer and a distributor of automotive replacement parts and accessories. As of August 30, 2008, the Company operated 4,092 stores in the United States and Puerto Rico, and 148 in Mexico.

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