AutoZone (NYSE:AZO) shares were raised to Strong Buy from Outperform at Raymond James on Wednesday, with analysts raising the stock price target to $3,100 from $2,850 per share.
The firm said it is lifting the stock's rating following its F1Q24 results based on its compelling valuation and fundamentals.
"We expect FY24 results to support our favorable long-term thesis of DIY/DIFM market share gains driven by improved parts coverage and availability following more mega hub openings (locations to double to 200 in near-term), enhanced delivery times (IT investments/SG&A investments), and easier y/y compares (mild winter weather last year)," analysts said.
"F1Q24's solid EBIT% and EPS outperformance, despite relatively flat DIY comps, further strengthens this view," they added.
Furthermore, analysts explained that while there is still work to be done in AutoZone's commercial business, they were encouraged by the sequential acceleration in revenue delivered in F1Q24 and expect AZO's results to continue to improve as it opens more mega hub locations.
"We are turning increasingly bullish on AZO's valuation via its divergent forward P/E multiple relative to ORLY," analysts stated, who added that international remains a "compelling long-term growth opportunity."