TD Cowen analyst Max Rakhlenko has maintained their bullish stance on AZO stock, giving a Buy rating yesterday.
Max Rakhlenko has given his Buy rating due to a combination of factors that highlight AutoZone’s strong market position and growth potential. The company is experiencing significant acceleration in its Do-It-For-Me (DIFM) segment, with comparable sales improving and exceeding expectations. This growth is attributed to better execution and favorable weather conditions, which have bolstered market share gains. Additionally, the planned expansion of megahubs is expected to further enhance delivery speed and market presence, positioning AutoZone to capitalize on opportunities following a competitor’s exit from key regions.
Despite higher-than-expected selling, general, and administrative (SG&A) expenses, Rakhlenko believes these investments are strategic and will fortify AutoZone’s market position in the long term. While there are short-term pressures on profitability due to these investments, they are anticipated to support sustained revenue and market share growth in the DIFM segment. Furthermore, AutoZone’s valuation remains attractive within a defensive sector, and the company is well-positioned to navigate an inflationary environment, reinforcing the Buy rating.