AutoZone’s Growth Potential and Strategic Initiatives Justify Buy Rating Despite Temporary Margin Pressures

Analyst Steven Zaccone from Citi maintained a Buy rating on AutoZone and decreased the price target to $4,775.00 from $4,900.00.

Steven Zaccone has given his Buy rating due to a combination of factors that highlight AutoZone’s potential for growth despite some current challenges. The company reported strong sales performance, particularly in the Do-It-For-Me (DIFM) segment, which saw significant year-over-year growth. This momentum, coupled with management’s expectation of further acceleration in the first half of 2026, underscores the company’s robust market position.
While there are margin pressures due to LIFO accounting and increased SG&A expenses, these are seen as temporary and manageable. The expectation is that the impact of LIFO will reverse in the following fiscal year, and the higher SG&A spending is aligned with strategic growth initiatives. Moreover, the company’s ability to maintain a healthy gross margin, despite these pressures, further supports the positive outlook. Consequently, Zaccone believes that AutoZone’s focus on expanding market share and its strategic initiatives justify the Buy rating.

Zaccone covers the Consumer Cyclical sector, focusing on stocks such as Home Depot, Floor & Decor Holdings, and Advance Auto Parts. According to TipRanks, Zaccone has an average return of 5.6% and a 60.43% success rate on recommended stocks.

In another report released today, Morgan Stanley also maintained a Buy rating on the stock with a $4,700.00 price target.