CFRA Downgrades Genuine Parts (GPC) to Hold
CFRA analyst Garrett Nelson downgraded Genuine Parts (NYSE: GPC) from Buy to Hold with a price target of $140.00 (from $180.00).
The analyst comments "We cut our 12-month target to $140 from $180, based on a '25 P/E of 13.3x, a discount to GPC's 5-year mean forward P/E of 18.2x. We lower our adjusted EPS estimates to $9.40 from $9.90 for '24 and to $10.50 from $10.80 for '25. GPC posts Q2 adjusted EPS of $2.44 vs. $2.44 (flat), well short of the $2.59 consensus. The miss was driven by a weaker-than-expected top line, as revenue rose 0.8% to $5.96B ($40M below consensus) as comp sales fell 0.9% (-0.6% for Auto and -1.6% for Industrial) but acquisitions provided a 2.2% benefit. Gross margin expanded 50 bps to 36.6% (30 bps ahead of consensus). GPC lowered its '24 adjusted EPS guidance to $9.30-$9.50 from $9.80-$9.95 (current consensus = $9.86) due to weaker sales expectations. However, GPC's 2024 free cash flow guidance of $0.8B-$1.0B was unchanged. The miss was highly uncharacteristic, as GPC had posted 16 straight bottom-line beats. While we like GPC's S&P Dividend Aristocrat status, we lower our opinion to Hold, seeing better opportunities across the space."
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Shares of Genuine Parts closed at $138.37 yesterday.