Goldman Sachs Downgrades AutoZone (AZO) to Sell

Goldman Sachs analyst Kate McShane downgraded AutoZone (NYSE: AZO) from Neutral to Sell with a price target of $2,917.00 (from $3,205.00).

The analyst comments "We downgrade AZO to Sell from Buy as we reposition our stock ratings distribution to favor companies that are more exposed to discretionary goods. We see the discretionary category as an area for stronger growth trends over the next 12 months as the interest rate environment eases, and we see a possible normalization of share of wallet. Our downgrade is based on: 1) The lower income consumer, to which AZO has significant exposure, will likely remain under pressure into 2025, 2) As cars become more affordable, we see increased risk of a lower amount of repairs, 3) Per HundredX, AZO's NPS and NPI scores have been on the decline, with AZO's NPI score approaching a 3-year low, 4) We see increased risk for higher interest expense and/or reduced share repurchases with 2025 notes coming due, and 6) AZO's valuation remains above historical absolute levels despite slower growth and the increased risk to the bottom line. Our new target price is $2,917, where we see -7% downside vs. 14.1% upside for rest of coverage. Since being added to the Americas Buy List on June 27, 2022, shares of AZO have returned +45.03% vs. +48.51% for the S&P 500. AZO outperformed its covered peers which returned ~14% on average during the same period."

For an analyst ratings summary and ratings history on AutoZone click here. For more ratings news on AutoZone click here.

Shares of AutoZone closed at $3129.78 yesterday.

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