Investing.com — A recent decline in AutoZone's (NYSE:AZO) share price since reporting lower-than-expected third-quarter sales gives the stock a more "attractive entry point," analysts at Evercore ISI said in a note.
The analysts upgraded their rating of the auto parts retailer to "outperform" from "in line" and hiked their target price to $2700 from $2640.
"We like [Autozone]’s [U.S. dollar] cash flow, small ticket exposure, and mild cyclicality with trade down positioning and share gain to keep the earnings compounding," the analysts wrote. "While [Autozone] is not immune to macro headwinds, we do see upside to Street estimates for a historical market leader."
Shares in Autozone added a little under 2% in early trading on Monday, but have dropped by more than 11% over the past one-month period.
The Nevada-based company was hit by a 7.4% increase in its inventory in the quarter ended May 6, while growth in domestic same-store sales slowed to 1.9%.
Higher input costs and supply chain constraints have forced many auto suppliers in the U.S. to hike the pricetags of their products. However, inflation-conscious consumers are pulling back spending on non-discretionary items in a bid to protect their wallets.
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