UBS Reiterates Buy on AutoZone (AZO) Following 4Q Report
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UBS reiterated a Buy rating and $825.00 price target on AutoZone (NYSE: AZO) following the company's 4Q earnings report. AZO was able to generate its 12th consecutive quarter of margin expansion, despite posting a 1% comp and seeing continued headwinds from its delivery and inventory initiatives.
Analyst Michael Lasser commented, "AZO's 4Q served as a reminder as to just how long an aftermarket retailer can be impacted from a milder than normal winter. While its overall comp came in at 1%, we estimate its SSS declined ~-2% in the NE, Midwest, & Mid Atlantic regions and up ~2% in the rest of the country. Encouragingly, trends improved throughout the quarter, setting the stage for an acceleration in the quarters ahead even as AZO faces tougher comparisons. It should benefit from the hot summer transitioning into more seasonal cold weather. Further, this should be complemented by some contribution from its initiatives (AZO plans to have more frequent deliveries at ~55% of its store base by the end of FY'17 vs. ~35% today). This puts it in good position to maintain its double-digit EPS growth, which looks appealing given its reasonable multiple of 16x."
Shares of AutoZone closed at $748.23 yesterday.
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