JPMorgan Hikes AutoZone Price Target Ahead of Q3 Earnings

On May 24, JPMorgan raised its price target for AutoZone Inc. (NYSE:AZO) from $3,830 to $4,350 while keeping an Overweight rating. The change took place prior to the company's third-quarter earnings release which is scheduled on May 28.

According to JPMorgan analysts, AutoZone Inc. (NYSE:AZO) is anticipated to gain market share and profit from self-help programs. Although margins have been high, JPMorgan expects the profit and loss statement to be favorable, indicating that any possible share price weakness after the earnings report would offer investors a decent chance to buy the company's shares.

JPMorgan emphasized AutoZone's process and technology improvements, including delivery routing and inventory allocation systems, which have enhanced the company's core capabilities. Furthermore, the firm indicates that AutoZone Inc. (NYSE:AZO) is probably only one or two quarters away from growth, taking into account factors such as tariff-driven inflation and the difficulties facing smaller competitors. Although its gross margin and operating margin estimates of 53.2% and 19.9%, respectively, are marginally below the Street's projections, the firm holds a cautious but optimistic outlook on AZO.

While we acknowledge the potential of AZO to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk.  If you are looking for an AI stock that is more promising than AZO and that has 100x upside potential, check out our report about the cheapest AI stock.

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Disclosure: None.