Core Viewpoint - AutoZone, Inc. (NYSE:AZO) is experiencing resilient demand and improving long-term earnings power, leading to a bullish outlook from JP Morgan analyst Christopher Horvers, who maintains an Overweight rating with a price target of $4,850 [1]. Demand and Comp Trends - Recent industry checks indicate no structural slowdown in DIY demand, despite some early-quarter volatility, with better weekend spending and supportive weather contributing to restored momentum [3]. - The analyst expects both DIY and "Do It For Me" (DIFM) comparable sales to accelerate, driven by firmer inflation, steady demand, and market share gains [3]. - Management anticipates mid-single-digit inflation in the near term, rising to high-single-digit levels by spring [3]. Margins, Costs, and Earnings Power - The gross margin outlook has been trimmed due to softer merchandising benefits and persistent mix pressure, with last year's LIFO impact creating a significant headwind [4]. - Management expects another large LIFO headwind early in the year, with easing pressure anticipated later, while the underlying gross margin is expected to remain flat to slightly higher, excluding LIFO effects [4]. - The SG&A outlook reflects faster store-level cost growth associated with higher comparable sales and expansion efforts, aligning with management's strategy to defend market share and support new locations [5]. Earnings Outlook - The changes in cost structure and market dynamics are expected to lead to a modestly higher operating margin and a slightly stronger EPS forecast, suggesting a potential positive shift in the earnings revision cycle [5]. - Rolling estimates forward is anticipated to enhance out-year earnings power as sales accelerate and LIFO effects reverse [6].

AutoZone, Inc. (NYSE:AZO) shares were little changed Wednesday as investors digested a fresh bullish call from JP Morgan.Analyst Christopher Horvers stuck with an Overweight rating and higher estimates, citing resilient demand and improving long-term earnings power.Horvers reiterated the rating, with a price forecast of $4,850.Also Read: AutoZone’s Domestic ‘Do It For Me’ Business Driving Market Share GainsHorvers said he raised near-term estimates after stronger comparable performance, though lower gross m ...