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."

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

Shares of Genuine Parts closed at $138.37 yesterday.

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