TD Cowen analyst Max Rakhlenko has maintained their neutral stance on AAP stock, giving a Hold rating yesterday.
Max Rakhlenko has given his Hold rating due to a combination of factors affecting Advance Auto Parts. The company is entering a crucial fiscal year with a weaker-than-expected start, which poses potential risks to its comparable sales and EBIT margin. Although there are initial signs of progress in the supply chain, the turnaround is expected to take time and carries execution risks. Investors may see continued volatility in the stock as they evaluate the feasibility of the company’s 2027 targets.
The company’s recent performance, including a decline in fourth-quarter comparable sales and a soft start to the first quarter, raises concerns. Despite favorable weather conditions, the guidance for the first quarter remains negative, and there is caution that the turnaround might be slower than anticipated. Additionally, management’s guidance on EBIT margin is challenging, with a need for significant improvement in gross margin expected only in the latter half of the year. The supply chain improvements are promising but will require time to fully scale, and the company must also address competitive pressures in the Mid-Atlantic region.
In another report released yesterday, BMO Capital also maintained a Hold rating on the stock with a $40.00 price target.