AAP Stock Forecast & Price Target

Advance Auto Parts has experienced substantial growth over the past several years through strategic acquisitions and organic initiatives, positioning the company for continued improvement in comparable sales through 2025, particularly in the second half as it benefits from enhanced merchandise and supply chain strategies. The company is poised for significant gross margin expansion, with targets suggesting an increase of over 100 basis points in the latter half of the year, driven by lower input costs and improved inventory management aimed at achieving in-stock levels above 90%. Additionally, with strong liquidity and a focus on improving operational efficiency, Advance Auto Parts remains on a positive trajectory towards meeting its long-term financial targets, including a 7% EBIT margin.

Advance Auto Parts is facing a negative outlook primarily due to weak year-to-date comparable sales trends and disappointing first-quarter guidance, which reflects a projected decline of approximately 2% in comparable sales. The company's Q1 performance has been affected by weather-related volatility, and consensus expectations for 2025 suggest that operating margins will fall short of guidance by approximately 20 basis points. Additionally, anticipated closure costs for stores and distribution centers, estimated at around $200 million, are likely to further pressure profitability and contribute to a modestly negative outlook for core margins.