ORLY: Pricing Tailwinds Are Expected To Drive Comp Momentum And Share Gains

Analysts have modestly increased their price target on O'Reilly Automotive to approximately $110.20 from $110.00, citing a clean Q3 print, attractive valuation after the recent pullback, and expectations for pricing tailwinds and same store sales strength to support sustained growth.

Analyst Commentary

Bullish analysts emphasize that the recent pullback has created an appealing entry point, particularly after a solid Q3 performance that reinforced confidence in the company’s operational execution and earnings durability.

Across recent research notes, they highlight pricing power, resilient demand, and an increasingly efficient supply chain as key supports for both near term comp momentum and longer term earnings growth.

Bullish Takeaways

• Bullish analysts see the 14 percent pullback from the 52 week high as creating an attractive valuation setup, with upside skewed favorably relative to execution risks.
• Expected pricing tailwinds through late 2025 and into early 2026 are viewed as a core driver of same store sales growth, supporting continued margin stability and EPS expansion.
• Initiation and target hikes in the $120 plus range signal growing conviction that the company can outgrow the broader auto parts sector through a mix of price, mix, and share gains.
• Analysts highlight the differentiated, improving supply chain as a competitive advantage that enhances parts availability and delivery speed, underpinning best in class service levels and share capture, particularly in the do it for me channel.

Bearish Takeaways

• More cautious analysts flag that while consumers are currently healthy, there is rising concern about demand normalization in the second half of the year, which could temper same store sales outperformance.
• Ongoing same SKU inflation is seen as a double edged sword, providing near term pricing benefit but risking elasticity and pushback if economic conditions soften.
• With the stock already trading at a premium to many peers, some see limited room for multiple expansion if pricing driven growth slows or comp trends decelerate from current levels.
• Any disruption to the company’s high service standards or supply chain execution would challenge the thesis that it can consistently take share from competitors and justify higher price targets.

What's in the News

• The board increased O'Reilly Automotive's share repurchase authorization by an additional $2 billion to a total of $29.75 billion and extended the program by three years, which signals continued confidence in long term cash generation (Key Developments).
• Between July 1, 2025 and November 7, 2025, the company repurchased approximately 7.38 million shares, or 0.87 percent of shares outstanding, for $722.28 million. This brings total buybacks under the long running program to 110.94 million shares for $27.15 billion (Key Developments).
• The company reaffirmed and updated full year 2025 guidance, projecting comparable store sales growth of 4.0 to 5.0 percent, total revenue of $17.6 billion to $17.8 billion, diluted EPS of $2.90 to $3.00, and operating margin of 19.2 to 19.7 percent (Key Developments).

Valuation Changes

• The fair value estimate has risen slightly to approximately $110.20 from $110.00, reflecting a modest upward revision in intrinsic value.
• The discount rate has increased slightly to about 8.67 percent from 8.49 percent, implying a marginally higher required return and risk assumption.
• Revenue growth has inched up to roughly 6.12 percent from 6.12 percent previously, indicating a very small positive adjustment to top line expectations.
• The net profit margin has edged down fractionally to about 14.55 percent from 14.56 percent, suggesting essentially stable profitability assumptions.
• The future P/E has risen slightly to approximately 37.24x from 36.99x, signaling a modest increase in the valuation multiple applied to forward earnings.