Analyst Steven Zaccone from Citi maintained a Hold rating on Advance Auto Parts and increased the price target to $60.00 from $49.00.
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Steven Zaccone has given his Hold rating due to a combination of factors surrounding Advance Auto Parts’ recent strategic decisions and financial performance. The company announced a plan to raise $1.5 billion in new debt and enter a new asset-based lending facility to bolster its supply chain financing program. This move is seen as necessary due to the company’s fall from investment-grade status, which could affect its vendor relationships. While this step is expected to improve liquidity, the high cost of capital may negatively impact earnings per share.
Additionally, Advance Auto Parts pre-announced its second-quarter results, which were in line with internal expectations but fell short of market expectations, especially when compared to a competitor’s performance. The company’s same-store sales showed minimal growth, and while sales figures were slightly above market predictions, the lack of significant upside was disappointing. These factors, combined with the uncertainty surrounding the timing and impact of the debt issuance, contribute to the Hold rating as the company navigates its business turnaround.
In another report released today, D.A. Davidson also reiterated a Hold rating on the stock with a $65.00 price target.
Based on the recent corporate insider activity of 88 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of AAP in relation to earlier this year.