UBS Reiterates Buy Ahead of Advance Auto Parts' (AAP) 2Q Release
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UBS reiterated a Buy rating and $175.00 price target on Advance Auto Parts (NYSE: AAP) ahead of the company's 2Q earnings release. UBS is expecting AAP to report a -4.5% comp, which is line with the consensus estimates.
Analyst Michael Lasser commented, "While we believe AAP has taken some prudent steps to improve its underlying biz, it's facing a challenging setup in 2Q. We model a -4.5% comp, which is line w. the cons. & would represent a step back from 1Q's -1.9%. Notably, ~40% of its stores are located in the NE & MW, regions that competitors have cited as being particularly weak after a milder winter led to less wear & tear on roads. This compares to ~30% at ORLY & AZO. Plus, integration headwinds likely persisted & there probably hasn’t been enough time for the new leadership to effectuate significant change. AAP's problems have been years, if not decades in the making. They will take time to fix. As such, it hasn't been operated to its potential. But, we think it can. Weakness in response to the 2Q results could present an even more compelling opportunity to buy the shares."
Shares of Advance Auto Parts closed at $170.49 yesterday.
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