VOL. 127 | NO. 125 | Wednesday, June 27, 2012
Deutsche Bank Analyst Boosts AutoZone to "Buy"
NEW YORK (AP) – A Deutsche Bank analyst on Tuesday raised his rating for AutoZone Inc. to "Buy" from Hold," saying that the auto parts retailer will soon get a boost from slowing new car sales and falling gas prices.
THE BIG PICTURE: When drivers put off purchases of new vehicles, opting instead to drive the ones they already have, they're forced to spend more on maintenance to keep those cars on the road. Deutsche Bank recently lowered its forecast for new car sales for 2013.
When sales of new vehicles tumbled during the Great Recession, AutoZone's sales soared and its shares rose. Since the end of 2009, the Memphis, Tenn.-based company's stock price has more than doubled.
In addition, lower gas prices prompt drivers to put more miles on their cars, also increasing their need for maintenance services and supplies.
THE ANALYSIS: In addition to the rating boost, analyst Mike Baker increased his price target for AutoZone by $40 to $425, saying that while new vehicle sales have continued to rise this year, the age of the average vehicle on the road also continues to increase, which bodes well for AutoZone.
In addition, the company has the best chance in the sector to post additional share gains in the commercial vehicle market and its margins continue to increase, he said.
THE SHARES: AutoZone shares rose $2.31 to $377.35 in afternoon trading. The stock has changed hands between $266.25 and $399.10 in the past 52 weeks.
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