What Happened?
Shares of auto parts and accessories retailer Advance Auto Parts (NYSE: AAP) jumped 9.4% in the afternoon session after Northcoast Research upgraded the stock from a "neutral" rating to a "buy." The investment firm set a $55.00 price target on the stock, which suggested a potential upside of more than 33% from the company's price at the time. The analyst behind the upgrade believed the company's restructuring strategy supported its prospects. These turnaround efforts, which included closing some locations while planning for new stores, had shown early signs of success.
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What Is The Market Telling Us
Advance Auto Parts’s shares are extremely volatile and have had 36 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 8 months 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 up 16.7% since the beginning of the year, but at $45.39 per share, it is still trading 31.7% 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 $272.32.
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