UPDATE - Nomura Securities Downgraded Advance Auto Parts (AAP) to Reduce

UPDATE - Nomura Securities downgraded Advance Auto Parts (NYSE: AAP) from Neutral to Reduce. PT lowered from $55 to $48.

Nomura analyst, Aram Rubinson, said, "AAP is a solid franchise with EBIT margin opportunity over time. However, we are concerned that margins need to go backwards before they ‘advance’. We cut EPS estimates for 2011 and 2012 to $4.20 and $4.00 (from $4.27 and $4.52, respectively). These are 8% and 32% below Street consensus. In prior reports, we suggested that AAP over-earns its gross margin. Our new forecasts quantify that claim. The catalyst for the change is high inventory and weaker sales. Price target of $48 assumes 5.5x 2011/12 EBITDA forecasts."

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