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Bank of America on Wednesday upgraded AutoZone (AZO, Financials) to buy and boosted its price target to $4,800, ahead of next weeks earnings report. The revised target reflects a 23% increase from the firms prior forecast and implies 24% upside from Tuesdays closing price.
AutoZone may benefit as rising auto tariffs push consumers to fix existing vehicles rather than purchase new ones, according to the BofA note. The analysts estimate tariffs could add $3,285 to the average cost of U.S.-made vehicles, with higher increases for imports.
BofA expects AutoZone to report fiscal Q3 earnings per share of $38.15, exceeding the Visible Alpha consensus estimate of $36.89. Comparable sales are forecast to grow 2% year over year.
Shares of AutoZone closed at $3,870.87 on Wednesday, down 0.4% on the day but up 37% from a year earlier. The stock is currently the third most expensive in the S&P 500, behind only NVR (NVR, Financials) and Booking Holdings (BKNG, Financials).
Analysts said AutoZone continues to gain share among both professional and do-it-yourself customers, suggesting durable demand even amid elevated pricing.
Investors will be watching next Tuesdays earnings release for updated guidance and commentary on tariff impacts.
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This article first appeared on GuruFocus.