UBS analysts upgraded AutoZone (NYSE:AZO) stock from Neutral to Buy and raised their price target from $2,800 to $2,900, noting that the current valuation presents a compelling purchasing opportunity. The analysts argued that the market undervalues the company’s commercial potential, with increased price competition fears and perceived dimming prospects having led to multiple compression.
The analysts suggested that as AutoZone proves its capability to manage these risks, a rally in its shares is likely. They forecasted a resurgence in the company’s DIFM growth and a steady DIY growth against the unstable macroeconomic backdrop, ultimately prompting a return to a premium valuation multiple of 19x, implying approximately 30% upside potential to the current price.