Advance Auto Parts (AAP) PT Raised to $70 at CFRA

CFRA analyst Garrett Nelson raised the price target on Advance Auto Parts (NYSE: AAP) to $70.00 (from $60.00) while maintaining a Hold rating.

The analyst comments "We increase our 12-month target by $10 to $70, based on a '25 P/E of 15.7x, a justified discount to its 5-year mean forward P/E of 17.9x. We maintain our EPS estimates of $4.00 for '24 and $4.45 for '25. AAP posts Q1 EPS of $0.67 vs. $0.81 (-17%), ahead of the $0.61 consensus. The beat was driven by lower-than-expected SG&A, as revenue fell 0.3% to $3.41B ($20M short of consensus) on a comp store sales decline of 0.2% (40 bps below consensus). Gross margin contracted 80 bps to 42.0% (in line with consensus). AAP's 2024 EPS guidance was unchanged at $3.75-$4.25, respectively, but the company raised net sales guidance slightly to $11.3B-$11.5B from $11.3B-$11.4B (current consensus = $3.73 and $11.35B). While we like U.S. auto aftermarket fundamentals, we recommend sticking with higher-quality names in the space. The average U.S. vehicle age just hit a record high of 12.6 years, according to S&P Global Mobility, meaning lots of older vehicles on the road are in need of frequent maintenance and repairs."

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