UPDATE: UBS Upgrades AutoZone (AZO) to Buy
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(Updated - September 12, 2016 7:36 AM EDT)
UBS upgraded AutoZone (NYSE: AZO) from Neutral to Buy with a price target of $825, implying upside of 14%. Analyst Michael Lasser sees opportunity given recent underperformance.
Lasser explained, "As we see it, the underperformance of AZO's shares in the last month (down -9.5% vs. AAP -8% & ORLY -3%) has created a compelling opportunity. Most likely, the pullback has been due to fears about demand in the auto part space, concerns over spending of the low-income segment, & the risks of the online players. We think these uncertainties are over-stated & AZO’s upcoming F4Q will serve as reminder that the co. is a beacon of stability. This is a call about the quarter. And the next one. And the next one. We believe it's likely that AZO will generate accelerating SSS growth in the coming periods either due to the onset of cold weather or its initiatives gaining traction. This will help it sustain its long track-record of double-digit EPS growth. This potential looks particularly attractive against its un-demanding valuation at 16.5x NTM EPS & a ~6% FCF yield."
Shares of AutoZone closed at $722.44 yesterday.
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