What Happened?
Shares of auto parts and accessories retailer Advance Auto Parts (NYSE: AAP) fell 7.6% in the afternoon session after several analysts cut their price targets on the stock following the company's third-quarter earnings report, raising concerns about its turnaround plan and future performance.
Although the company reported a 3.0% increase in comparable store sales and a return to adjusted profitability, the news was overshadowed by analyst skepticism. DA Davidson and Morgan Stanley both lowered their price targets on Advance Auto Parts to $55. Analysts from UBS also expressed caution, maintaining a hold rating and citing worries about whether the positive trends could last given potential "consumer headwinds." Broader concerns also lingered, as the company had been dealing with deepening losses in previous years and faced costs tied to store closures, adding to uncertainty about its path to profitability.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Advance Auto Parts? Access our full analysis report here.
What Is The Market Telling Us
Advance Auto Parts’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 10 days ago when the stock gained 5.5% on the news that a key competitor reported positive sales figures, boosting sentiment for the auto parts retail sector ahead of the company's own earnings release. Genuine Parts Company, a rival in the industry, announced that its third-quarter sales increased by 4.9% compared to the same period in the previous year, driven by a 2.3% rise in comparable sales. This news suggested healthy consumer demand across the market. Adding to the constructive outlook, UBS reiterated its Neutral rating on Advance Auto Parts. The bank's analysts also noted that they expected the company to have achieved low-single-digit same-store sales growth in its third quarter, with its professional 'do-it-for-me' segment likely seeing mid-single-digit gains.
Advance Auto Parts is down 5.5% since the beginning of the year, and at $45.50 per share, it is trading 31.6% below its 52-week high of $66.50 from July 2025. Investors who bought $1,000 worth of Advance Auto Parts’s shares 5 years ago would now be looking at an investment worth $300.57.
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