Morgan Joseph Initiates Coverage on AutoZone (AZO) with a Buy; Best In Class
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Morgan Joseph initiates coverage on AutoZone Inc. (NYSE: AZO) with a Buy. Price target $175.
Morgan analyst says, "AutoZone boasts industry leading market share, gross and EBIT margins, and cash flow production/yield. Our $175 price target assumes a 13x P/E multiple to our 2010 EPS estimate of $13.16, which is in-line with expected growth rates, below comparable peer multiples. Elite core profit margins generating strong free cash flow. With roughly $180mm in depreciation/amortization and annual net income above $650mm, AutoZone generates strong free cash flow, over $600mm (8% yield in FY09) annually, with a similar yield projected in 2010 and beyond...4% historical industry growth; improving fundamentals could add upside. Over the past ten years, the automotive aftermarket has expanded, on average, at roughly 4% per year. With lower Y/Y gasoline prices, an increasing average vehicle age, and declining new dealership totals, AutoZone's recent comparable store sales results experienced a boost; solid industry fundamentals may fuel additional near-term growth.
To see more analyst ratings on AZO Click Here.
AutoZone, Inc. operates as a specialty retailer and distributor of automotive replacement parts and accessories.
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