Nomura Securities Maintains a 'Reduce' on Advance Auto Parts (AAP); 3Q Preview

Nomura Securities maintains a 'Reduce' on Advance Auto Parts (NYSE: AAP) price target of $54.00.

Nomura analyst, Aram Rubinson, says, "Advance Auto is scheduled to report Q3 EPS on Wednesday, November 8 (after market). We recently raised our estimates on AAP as a read-across from a strong ORLY beat, but we remain below consensus for Q3 ($1.04 vs. $1.18) and for 2012 ($4.77 vs. $5.32). AAP has taken an increasingly careful stance on SG&A. Store hours have narrowed somewhat, and we have seen a small number of lay-offs in Roanoke. More than anything, SG&A is likely to determine where Q3 EPS falls. AAP is in a good business and is throwing off good cash flow. Our concern is that AAP’s gross margin surge will recede. Longer term, we worry about AAP’s competitive position between AutoZone (NYSE: AZO) and O'Reilly (Nasdaq: ORLY)."

For an analyst ratings summary and ratings history on Advance Auto Parts click here. For more ratings news on Advance Auto Parts click here.

Shares of Advance Auto Parts closed at $66.45 yesterday.

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