Citi upgraded O'Reilly Automotive (NASDAQ:ORLY) to a Buy rating (From Neutral) and raised their 12-month price target on the stock to $1,040.00 (From $983.00) following a recent pullback in share price.
“We think the recent pullback in shares presents an attractive buying opportunity for the stable, defensive retailer,” Citi analysts wrote in a note.
Citi sees a challenging period ahead for retail sectors, with reduced consumer spending on non-essential items expected in the latter half of 2023 and throughout 2024. Additionally, they observe difficulties in execution within defensive sectors.
In this context, Citi finds the stability of the auto parts retail industry to be particularly impressive, with ORLY standing out as the historically most consistent player among auto parts retailers. Citi anticipates strong execution from ORLY in the near to medium term.
Citi predicts a slight increase in EPS during the second half of 2023 and in 2024 compared to the market consensus. This projection is underpinned by robust revenue growth, steady profit margins, and a continuous pattern of share buybacks.
Shares of ORLY are up 3.99% in pre-market trading on Thursday.