Evercore’s Sector Check Points to a Modest Target Cut for Advance Auto Parts (AAP)

Core Insights - Advance Auto Parts, Inc. (NYSE:AAP) is recognized as one of the 11 Best Low Priced Dividend Stocks to Buy according to analysts [1] - Evercore ISI has reduced the price target for Advance Auto Parts from $60 to $58 while maintaining an In Line rating [2] - The company reported its best quarter in over two years, with a 3% growth in comparable sales and a 370 basis point year-over-year increase in adjusted operating margin to 4.4% [3] - Advance Auto Parts is implementing a new assortment framework in its 50 largest markets, which account for approximately 70% of its sales, and plans to open 14 market hubs this year [4] - The company has restructured its debt, raising nearly $2 billion to enhance liquidity [4] Financial Performance - The company achieved a 3% comparable sales growth across its Pro and DIY channels [3] - Adjusted operating margin increased by 370 basis points year-over-year to 4.4% [3] - Advance Auto Parts anticipates approximately 200 basis points of margin expansion for FY25 [3] Strategic Initiatives - The rollout of a new assortment framework is taking place across the 50 largest markets [4] - Plans to open 14 market hubs this year, including 10 conversions and 4 greenfield locations, bringing the total to 33 locations by year-end [4] - The company has raised nearly $2 billion to improve its liquidity and reshape its debt structure [4]