What Happened?

Shares of auto parts and accessories retailer Advance Auto Parts (NYSE: AAP) fell 8% in the afternoon session after analysts at Goldman Sachs downgraded the stock to "sell" from "neutral." 

The influential Wall Street firm also cut its price target on the auto parts retailer to $46 from $48. Analysts at Goldman expressed concerns that Advance Auto Parts is losing market share to its rivals. 

The downgrade suggests that the company's current valuation is dependent on a recovery in profit margins, which Goldman believes may not happen in the current economic environment. This negative assessment from a major investment bank has clearly spooked investors, adding to existing worries about the company's long-running turnaround efforts.

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, it’s free.

What The Market Is Telling Us

Advance Auto Parts’s shares are extremely volatile and have had 30 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 biggest move we wrote about over the last year was about 1 month ago when the stock gained 53.2% on the news that the company reported impressive first-quarter 2025 results, which blew past analysts' sales and EPS expectations, despite shutting some of its stores to optimize operations. 

These optimization efforts resulted in roughly flat top-line sales as margins also came under pressure during the quarter. 

However, its full-year EPS guidance trumped Wall Street's estimates as the company reaffirmed fiscal year 2025 guidance. Overall, we think this was a very solid quarter with some key areas of upside, especially amid fears of economic weakness and tariff headwinds.

Advance Auto Parts is down 1.4% since the beginning of the year, and at $47.45 per share, it is trading 27.3% below its 52-week high of $65.30 from June 2024. Investors who bought $1,000 worth of Advance Auto Parts’s shares 5 years ago would now be looking at an investment worth $331.78.

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