O’Reilly Automotive price target raised to $925 from $850 at Wells Fargo

Wells Fargo analyst Zachary Fadem raised the firm’s price target on O’Reilly Automotive to $925 from $850 and keeps an Overweight rating on the shares. Despite industry-leading comps and clear share gains, the analyst believes a case can be made that O’Reilly Automotive under-earned in 2022 via 50bps of LIFO pressure and 100bps in DIFM price investments. In 2023, he sees the benefits of a resilient, needs-based category, little evidence of pricing roll back, and likely tailwinds from share gains and potentially improving margins. While valuation upside is a harder argument today, Fadem likes the 2023 setup, with its achievable/beatable expectations, impressive shareholder returns, and category more resistant to volatile macro variables.