TD Cowen Keeps Buy Rating on AutoZone (AZO), Sees Good Potential

On Wednesday, May 28, TD Cowen reaffirmed a “Buy” rating on AutoZone, Inc. (NYSE:AZO) with a price target of $4,300.

TD Cowen analyst, Max Rakhlenko, emphasized that the company is performing well despite some short-term challenges. The analyst discussed the company’s domestic comparable sales, which grew by 5% in the most recent quarter, supported by growth in both the do-it-for-me (DIFM) and do-it-yourself (DIY) segments.

A technician in a mechanic’s uniform replacing an A/C compressor, signifying the company’s automotive replacement parts business.

AutoZone, Inc.’s (NYSE:AZO) recently reported Q3 results, which were mixed. While domestic sales growth was impressive, the company faced margin pressures caused by one-time factors and strategic long-term investments. According to Rakhlenko, these investments are expected to impact margins in the short term only and margins should return to normal in future quarters. The analyst also pointed out the potential for AutoZone, Inc. (NYSE:AZO) to benefit from these strategic initiatives as they mature.

Additionally, Rakhlenko noted that the company is well-positioned to benefit from the likely inflation trends and the opportunities to grow its market share. The analyst believes that AutoZone, Inc. (NYSE:AZO) is making strategic decisions, which will be beneficial in the long run.

AutoZone, Inc. (NYSE:AZO) is an American company that specializes in aftermarket automotive parts. It is the leading retailer and distributor of automotive replacement parts and accessories in the US.

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Disclosure: None.