Advance Auto Parts: Evercore ISI Group maintains In-Line with PT raised to $60.

Advance Auto Parts: Evercore ISI Group maintains In-Line with PT raised to $60.

Title: Evercore ISI Raises Price Target for Advance Auto Parts to $60

July 02, 2025 - In a significant move, Evercore ISI has raised its price target for Advance Auto Parts (NYSE:AAP) to $60 from the previous $58, while maintaining an "In Line" rating. This upward revision reflects a balanced view of the company's prospects amidst a broader trend of analysts downgrading the stock due to recent earnings reports and revenue declines [2].

Advance Auto Parts reported its second-quarter 2025 earnings with an adjusted diluted earnings per share (EPS) of $0.69, exceeding analysts' forecasts of $0.53. This result marked a 30.19% surprise, indicating better-than-expected performance. The company's revenue reached $2 billion, slightly above the anticipated $1.97 billion, though it represents an 8% decline compared to the previous year, highlighting ongoing market challenges [1].

Evercore ISI noted positive developments in AAP’s professional installer (DIFM) segment, which showed low-single-digit comparable sales growth with acceleration in the final four weeks of the quarter, suggesting momentum heading into Q3. The firm highlighted the company’s recent $1.95 billion senior notes issuance as "costly but necessary" given AAP’s non-investment grade credit standing and recent rating agency downgrade, though it will create an incremental 30-cent EPS headwind in 2025 that will carry into 2026 [3].

Despite the quarterly results, the research firm pointed out that AAP continues to lose market share with comparable sales below 1%, while competitors AutoZone and O’Reilly Automotive are posting 3-4% comparable sales growth. Year-to-date, AAP has reported negative cash flow of $201 million as it works through store optimization initiatives, while gross margin improvements are being partially offset by previously capitalized inventory costs, a trend likely to continue into the second half of the year [1].

Institutional investors have shown mixed sentiment towards the stock. AMG National Trust Bank, Franklin Resources Inc., Cerity Partners LLC, Bragg Financial Advisors Inc., and Janney Montgomery Scott LLC have increased their holdings in the company, while others have remained neutral or sold their positions. Hedge funds and institutional investors collectively own 88.75% of the company's stock [2].

Despite the downgrades, Evercore ISI's revised price target reflects a cautious optimism, acknowledging the company's strong dividend payout ratio of 1.7% and its recent dividend announcement. The firm's In-Line rating suggests a neutral stance, indicating that while there are risks associated with the stock, the potential for growth and stability in the automotive parts industry may justify the investment [2].

References:
[1] https://za.investing.com/news/analyst-ratings/advance-auto-parts-stock-price-target-raised-to-60-by-evercore-isi-93CH-3842420
[2] https://www.ainvest.com/news/advance-auto-parts-evercore-isi-raises-pt-58-56-maintains-line-2508/
[3] https://www.investing.com/news/analyst-ratings/advance-auto-parts-stock-price-target-raised-to-60-by-evercore-isi-93CH-4194948