AZO: Ongoing Share Gains Will Drive Strength As Margin Headwinds Ease

AutoZone’s analyst price target has edged lower by $4 to $4,579, as analysts point to persistent, though largely temporary, margin pressures following mixed quarterly results. This comes despite ongoing share gains and long-term growth initiatives.

Analyst Commentary

Following AutoZone’s latest quarterly results, Wall Street analysts have provided a range of perspectives on the company’s outlook, marking both ongoing strengths and points of caution. Many research updates reflect adjustments to price targets along with underlying rationale tied to operating trends and growth initiatives.

Bullish Takeaways

• Bullish analysts highlight AutoZone’s resilient sales momentum, supported by ongoing share gains in both DIY and do-it-for-me channels and continued market share expansion. This is noted even as the company faces short-term margin pressures.
• Several price target increases were attributed to expectations for an acceleration in store expansion and successful same-store sales initiatives. These are viewed as growth drivers into the next fiscal year.
• Even amid macro and margin headwinds, long-term EPS growth is expected to be robust. This is aided by disciplined capital allocation and sustained demand within the automotive aftermarket.
• There is confidence that margin pressures tied to LIFO charges and SG&A investments are temporary. Management’s strategy is seen as supporting a return to stronger profitability as those factors normalize.

Bearish Takeaways

• Bearish analysts warn that margin headwinds may persist in the near term, especially as higher SG&A expenses and LIFO-related charges weigh on profitability.
• Mixed quarterly results, including earnings coming in below expectations, raised concerns about the durability of recent sales trends and execution around cost management.
• Some caution remains regarding potential volatility in do-it-yourself demand, as macroeconomic factors and changing consumer spending could moderate topline growth.
• There is also apprehension over the sustainability of aggressive store growth, which brings upfront cost pressure that could impact earnings leverage if sales growth does not keep pace.

What's in the News

• On October 9, 2025, AutoZone increased its equity buyback plan by an additional $1,500 million, bringing the total authorization to $33,750 million (Key Developments).
• Between May 11, 2025, and August 30, 2025, AutoZone repurchased 116,928 shares for $446.74 million, resulting in the completion of 44,805,959 shares repurchased with a total value of $31,617.7 million under the ongoing buyback plan (Key Developments).

Valuation Changes

• Fair Value Estimate has decreased slightly from $4,583 to $4,579, reflecting a marginal adjustment in overall valuation assumptions.
• Discount Rate has risen slightly from 8.69% to 8.75%, suggesting a modest increase in projected risk or cost of capital.
• Revenue Growth projections have edged lower from 7.83% to 7.82%, indicating a negligible reduction in sales growth expectations.
• Net Profit Margin has declined minimally from 13.49% to 13.48%, signaling a marginal narrowing of anticipated profitability levels.
• Future P/E multiple has increased very slightly from 29.41x to 29.46x, reflecting a minor change in forward earnings valuation.