Advance Auto Parts: Sell Rating Amidst Financial Struggles and Market Challenges

Advance Auto Parts (AAP – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Robert Ohmes from Bank of America Securities reiterated a Sell rating on the stock and has a $39.00 price target.

Robert Ohmes has given his Sell rating due to a combination of factors affecting Advance Auto Parts. Despite some progress in turnaround initiatives, the company’s financial performance remains underwhelming. The first quarter showed a negative adjusted EPS and a slight decline in comparable sales, although there was some improvement in the Pro segment. Gross margin contracted due to liquidation sales, and there was deleverage in SG&A because of increased labor costs.
Ohmes also highlights the challenges in the DIY market, exacerbated by inflation and weak consumer sentiment, which could hinder growth. While there are strategic initiatives in place, the uncertainty surrounding their returns and the broader consumer environment adds pressure on the company’s sales and margins. Consequently, Ohmes reiterates an Underperform rating, reflecting concerns over the timing of benefits from strategic investments and ongoing consumer uncertainty.

According to TipRanks, Ohmes is a 5-star analyst with an average return of 8.8% and a 57.73% success rate. Ohmes covers the Consumer Cyclical sector, focusing on stocks such as O’Reilly Auto, AutoZone, and Lowe’s.