Evercore ISI Reiterates Outperform Rating on O'Reilly Automotive (ORLY)

Evercore ISI analyst Greg Melich reiterated an Outperform rating and $97.00 price target on O'Reilly Automotive (NASDAQ: ORLY)

The analyst comments "ORLY reports F2Q Results after the close on Wednesday (7/23). ORLY stock has maintained its leadership status YTD up 17% vs. the S&P up 7% and the S&P Retail Index flat, yet the 3% rise in the past month has trailed the market by 100bps we believe reflecting the choppy consumer backdrop and potential weather impacts during the quarter. That said, we see 2Q results coming in relatively in line with the Street (i.e. 3.5 to 4pct comp and ~78cents of earnings), with the FY guide being moved up as comps continue to run the near-top end of initial expectations. Recall, ORLY’s initial FY25 guide called for 2 to 4pct comp growth and now with 2Q likely mirroring 1Q in coming in near the top end, we would not be surprised if ORLY shifts the goalposts up to +3 to 5pct; quarter to date trends will be important and ORLY is traditionally conservative. Inflation uptick is the main focus, in our view, with input cost inflation likely starting to tick up recently reflecting tariff pass through starting to impact the market. While some trade down/deferral is possible, the potential for higher new (and ultimately used) car prices is likely to keep consumers trading into auto parts for essential repairs even if discretionary orders (~15% of the business) remain under pressure. Our discussions suggest investor expectations are relatively subdued for a 3.5-4% comp, so we believe much of the focus is on the potential for a 2H25 step-up in comps as inflation pass through takes hold in earnest. We believe mgmt. will likely guide FY EPS in the range of $2.85 to $2.95, a wider but mostly in line range with the prior (adjusted for stock split) guide which compares to the current Street estimates of $2.93."

For an analyst ratings summary and ratings history on O'Reilly Automotive click here. For more ratings news on O'Reilly Automotive click here.

Shares of O'Reilly Automotive closed at $92.34 yesterday.

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