Shares of Advanced Auto Parts (AAP) Fall Despite Deutsche Bank's New 'Buy' Rating
Shares of Advanced Auto Parts (NYSE: AAP) made a push to the upside this morning, opening $1.51 higher ($71.14) than last Friday's close ($69.63). The stock continued higher and topped out at $71.60 (+2.8%), but then shares fizzled and look to close at the lows of the day.
Today's initial move higher may have been helped from Deutsche Bank, which initiated coverage on AAP with a Buy rating and $80 price target.
Deutsche analyst said, "We believe that AAP can grow its margins primarily by improving its cost structure relative to peers as the company seeks to harvests past investments. These investments included growth in headcount as AAP ramped up its DIFM business from 22% of sales and 1.8% share to 37% and 4.0% share in 2011, by our estimate. Margin expansion will be the main driver to AAP’s above average earnings growth rate, in our view..We estimate that AAP will generate close to $400mm in free cash flow annually, returning cash to shareholders through buybacks, contributing to earnings growth."
AAP is currently trading at $69.15, down $0.48 (-0.69%). Although, overall, stock is trading at the very top of its 52-wk range ($49.50 - 72.32)
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