Why Advance Auto Parts (AAP) Shares Are Trading Lower Today

What Happened?

Shares of auto parts and accessories retailer Advance Auto Parts (NYSE:AAP) fell 2.6% in the afternoon session after investors digested the difficult road ahead for the company's ongoing business transformation, which involves significant store closures. 

The stock's move came after analysts at UBS met with the company's leadership team. Following the meeting, UBS maintained its Neutral rating on the stock. Advance Auto Parts' management expressed confidence in its turnaround plan, which aimed to achieve a 7% operating margin by 2027. However, the company also acknowledged that progress would likely be uneven and that challenges, including tariffs, were complicating some strategies. This transformation plan is substantial, as the company previously announced a strategy to close over 500 corporate stores and four distribution centers. While its most recent quarterly earnings beat forecasts, its revenue had dropped 8% compared to the previous year, underscoring the hurdles the company faced.

The shares closed the day at $58.69, down 2.4% from previous close.

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What Is The Market Telling Us

Advance Auto Parts’s shares are extremely volatile and have had 37 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 previous big move we wrote about was 4 days ago when the stock gained 2.7% on the news that Morgan Stanley raised its price target on the stock. 

The investment firm lifted its price objective to $60 from $55, suggesting increased confidence in the auto parts retailer's value. It is important to note, however, that the analyst maintained an 'Equal-Weight' rating, which is a neutral stance. This action is part of a broader trend, as other firms like Mizuho, Evercore ISI Group, and Wells Fargo have also recently raised their price targets while maintaining neutral-equivalent ratings. This pattern suggests a cautiously optimistic sentiment from Wall Street regarding the company's future performance.

Advance Auto Parts is up 22.5% since the beginning of the year, but at $58.96 per share, it is still trading 11.3% 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 $397.22.

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