Shares of Advance Auto Parts (NYSE:AAP) gained more than 3% yesterday after it reported mixed second-quarter results and announced new leadership. While AAP surpassed revenue expectations, it fell short of earnings estimates. The automotive parts provider’s performance was impacted by high product costs and supply chain issues.
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Alongside earnings, the company disclosed the appointment of Shane O’Kelly as President and CEO of Advance Auto, effective September 11. Furthermore, AAP has initiated an operational and strategic review of the company’s business.
Looking ahead, the company has lowered its full-year 2023 EPS outlook to between $4.5 and $5.10, from the previous outlook of $6 to $6.5. On the revenue front, Iskander slightly raised guidance owing to strength in the company’s professional business. Revenue is now anticipated to be in the range of $11.25 billion to $11.35 billion, up from the previous guidance of $11.2 billion to $11.3 billion.
It is worth highlighting that following the earnings release, three analysts reiterated a Hold rating on AAP stock. Among the neutral analysts, Goldman Sachs analyst Kate McShane expects an updated long-term strategy to be announced soon owing to leadership changes. Furthermore, McShane believes that falling profits could ultimately make AAP’s vendor financing program less attractive and increase its working capital requirements.
Is AAP a Buy?
Overall, analysts are sidelined on AAP stock with a Hold consensus rating. This is based on 2 Buy, 16 Hold, and 1 Sell recommendations. Meanwhile, the average analysts’ price target of $75.88 implies an upside potential of 9.27% from the current level.
