CarParts.com (PRTS) PT Lowered to $5 at Lake Street Capital Markets on 'multiple compression and lowered 2024 estimates'

Lake Street Capital Markets analyst Ryan Meyers lowered the price target on CarParts.com (NASDAQ: PRTS) to $5.00 (from $7.00) while maintaining a Buy rating.

The analyst comments: 'The 2024 guidance reflects the continued softness across the business. The weak consumer environment is resulting in lower prices as demand has softened, so revenue growth has remained muted despite volume increases. In the meantime, freight prices continue to increase which are not able to be offset by higher prices,so margins are being compressed. We believe shares will potentially be range-bound in the near term as growth has slowed, margins are contracting, and demand is soft. That said, we think the long-term thesis remains intact. CarParts continues to take market share in a $300B+ industry and is investing in the areas of marketing, its e-commerce platform, product assortment, and customer experience. On the cost side, it continues to gain efficiencies in the areas of labor and order flow management which has allowed for improved costs across its warehouses. Additionally, the headcount reduction should provide some cost improvement. At 0.1x revenue and ~5x
EBITDA, we think shares are undervalued relative to the peer group that trades at 2x revenue and 13x EBITDA. We are reiterating our Buy rating and revising our price target down to $5 based on multiple compression and lowered 2024 estimates."

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