Advance Auto Parts Downgraded to Sell Amid Earnings Miss and Weak Outlook

CFRA analysts downgraded Advance Auto Parts (NYSE:AAP) from Hold to Sell, citing disappointing third-quarter results and a bleak outlook for the company’s financial performance. The analysts also slashed the 12-month target price to $25 from $55, reflecting diminished growth expectations.

Advance Auto Parts reported an adjusted loss per share of $0.04 for the third quarter, falling well short of the Street consensus estimate of $0.54. Revenue dropped 3% year-over-year to $2.15 billion, missing projections by $520 million. Comparable store sales declined by 2.3%, underperforming expectations by 60 basis points. The weaker-than-anticipated top-line performance raised concerns about the company’s ability to stabilize its operations.

The company revised its 2024 guidance, projecting fourth-quarter net sales of $1.90 billion and an adjusted EPS loss between $1.50 and $0.90. Both figures are significantly below market expectations of $2.00 billion in revenue and a $0.06 EPS gain.

The analysts lowered earnings estimates for 2024 and 2025 to $0.10 and $1.40 per share, respectively, from previous estimates of $2.30 and $3.65. With the company resorting to asset sales and store closures to address operational inefficiencies, the outlook remains grim. CFRA expressed concern over Advance Auto Parts’ ongoing struggles to achieve stability, justifying the downgrade to Sell.