Wedbush Remains Bullish on Advance Auto Parts (AAP) Following Solid 3Q
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Wedbush maintained an Outperform rating and $175.00 price target on Advance Auto Parts (NYSE: AAP) following the company's 3Q earnings report. EPS was reported at $1.73, ahead of the consensus estimate of $1.71. Operating margins of 9.7% were in line with consensus.
Analyst Seth Basham commented, "AAP delivered the elements necessary to jump start this story. Results for 3Q16 beat expectations, the company pointed to positive comps and higher operating margins in 2017 and set a five year target for 500+ bps higher operating margins and mid-single-digit comps; combined with sharp working capital improvements to help fuel share repurchases, that points to an estimated ~$17 in EPS in 2021. Massive ($500m, ~5% of sales) of projected gross productivity improvements provide a foundation for much higher margins, while a focused strategy—underpinned by a customer-obsessed culture—should drive comps. Led by CEO Tom Greco, we believe this new management team is highly capable of executing this strategy. As improvement builds, we believe AAP shares should outperform."
Shares of Advance Auto Parts closed at $142.90 yesterday.
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