Oppenheimer upgrades AutoZone as a protective investment amid tariff issues

In the United States on May 2, 2025, Oppenheimer upgraded AutoZone's stock rating from perform to outperform, highlighting the retailer as a potential hedge for investors facing ongoing tariff challenges. Analyst Brian Nagel set a new price target of $4,600, which suggests a 23% increase from AutoZone's closing price of $3,732.92 on the preceding Thursday. The upgrade comes as AutoZone stock has increased by nearly 17% in 2025, reflecting positive market sentiment towards the automotive parts sector amidst economic uncertainties. Nagel pointed out AutoZone's historic valuation discount as a critical reason for the upgrade, indicating that the relative valuation had become appealing for investors. He expressed optimism regarding the auto parts retail market's resilience, particularly due to companies in the sector being well-positioned to handle the impacts of tariff-related costs. He indicated that higher new car prices could lead consumers to maintain their existing vehicles longer, stimulating growth in the auto parts sector. Furthermore, Nagel noted AutoZone's strategic pivot toward the commercial sales sector, which accounted for approximately 30% of its domestic revenues during the second quarter. Despite a moderation in commercial sales growth after a period of enhanced demand triggered by the pandemic, the analyst suggests that upcoming tariff-related advantages, such as same-SKU inflation and reduced competition, could stimulate growth in this segment, serving as a catalyst for the company's stock performance. Overall, Oppenheimer’s assessment positions AutoZone as a resilient player in the market, benefiting from economic conditions that favor auto parts retailers and predicting strong future growth despite the looming tariff-related pressures. This perspective aligns with a broader view of the industry as an attractive haven for investors amid macroeconomic instability, citing structural attributes and solid financial positioning as favorable indicators for the company’s prospects.