On Friday, BMO (TSX:BMO) Capital initiated coverage on O'Reilly (NASDAQ:ORLY) Automotive, listed on NASDAQ: ORLY, with an Outperform rating and a price target of $1,400.00. The firm provided a positive outlook on the company, emphasizing its advantageous position in a growing but fragmented market. With a current market capitalization of $73.31 billion and trading near its 52-week high of $1,275.80, InvestingPro analysis indicates the stock is currently trading above its Fair Value.
The analyst from BMO Capital highlighted that O'Reilly Automotive is gaining market share and benefits from an expanding and aging domestic car population. The vehicles' increasing complexity and the less than expected impact from electric vehicles (EVs) also contribute to the company's growth narrative. The company has demonstrated solid performance with revenue growth of 5.25% and an impressive gross margin of 51.21%.
Additionally, the analyst pointed out the potential for O'Reilly Automotive to expand into untapped geographical areas. According to BMO Capital, the company's exceptional customer service is a key factor that will continue to drive its market outperformance.
O'Reilly Automotive's stock price target of $1,400 by BMO Capital suggests confidence in the company's ability to leverage these market conditions. The firm's Outperform rating indicates an expectation that the stock will do better than the overall market in the near future. The stock has already shown strong momentum with a 27.51% return over the past six months. Discover more insights and 14 additional ProTips with InvestingPro, including detailed valuation metrics and growth forecasts.
The coverage initiation and optimistic price target by BMO Capital could influence investors' perception of O'Reilly Automotive's stock. The company's focus on customer service and geographic expansion are seen as strategic advantages that could foster continued success in its sector.
In other recent news, O'Reilly Automotive has announced a $2 billion increase in its share repurchase program, bringing the total authorization to $27.75 billion. This move, which is seen as a tool to manage the company's capital structure and potentially increase shareholder value, is effective immediately and will last for three years. Meanwhile, the company reported Q3 earnings per share (EPS) of $10.55, slightly missing estimates, and revised its 2024 guidance downward, expecting EPS between $40.60 and $41.10. Despite these adjustments, O'Reilly Automotive outperformed many competitors in comparable store sales.
In terms of analyst outlooks, Roth/MKM maintained a Buy rating on O'Reilly Automotive, setting a target price of $1,337. Other firms such as Mizuho (NYSE:MFG), Truist Securities, TD (TSX:TD) Cowen, UBS, and Jefferies have also raised their price targets for the company.
In addition, O'Reilly Automotive opened 47 new stores in Q3, bringing the total to 111 for the year. The company's executives have indicated a readiness to pass tariff costs to consumers and have noted a reduction in reliance on Chinese suppliers. These are part of the recent developments at O'Reilly Automotive.
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