AutoZone heads into Tuesday’s earnings report with Wall Street expecting another difficult quarter, but the stock may have reached the point where merely avoiding another disappointment matters.
Shares closed Monday at $2,803.25, down 1.82%, leaving them near a 52-week low and roughly 31% below year-ago levels.
Analysts expect fiscal fourth-quarter earnings of about $54.30 a share on revenue near $6.71 billion. Yet several firms that have cut forecasts still maintain bullish ratings.
AutoZone has already been punished for a weak consumer
The pressure on AutoZone has centred on its DIY customer, where higher fuel costs and strain on lower-income households have made motorists more cautious about discretionary repairs.
Oppenheimer analyst Brian Nagel recently cut his fourth-quarter and fiscal 2027 comparable-sales expectations, arguing that the oil-price spike was making an already difficult consumer backdrop worse.
The firm lowered its price target to $3,500 from $4,300 and removed AutoZone from its Top Pick list.
Importantly, Oppenheimer kept an Outperform rating.
That distinction captures the earnings setup. Wall Street has become more cautious about the next few quarters without abandoning the longer-term case.
AutoZone therefore does not need to convince investors that DIY demand has suddenly recovered. It needs to show that conditions are stabilising.
The key number will be US same-store sales, especially the gap between DIY and commercial growth.
Investors will also watch gross margins, SG&A growth and whether store investment is beginning to produce better sales leverage.
UBS thinks the slowdown may have bottomed
UBS is more explicit about the possibility of an inflection.
The bank expects domestic comparable sales to rise about 2.5%, below the Street’s earlier 3.6% estimate, with commercial sales growing around 8% and DIY roughly flat.
UBS also forecasts fourth-quarter EPS of $52.19, below consensus.
Those numbers hardly suggest a strong quarter. But UBS believes sales growth “bottomed” in June and improved modestly through July and August, making the quarter a potential “inflection point” for fiscal 2027.
Its argument rests on more than sales. Easing LIFO inventory pressure, maturing stores, additional Mega Hubs, commercial market-share gains, moderating expense growth and continued buybacks could support mid-teens EPS growth next year.
UBS therefore retains a Buy rating and $4,555 price target, implying substantial upside from Monday’s close.
The thesis is simple: AutoZone does not need great numbers on Tuesday. It needs evidence that the direction of travel has stopped getting worse.
Valuation now matters more than a clean earnings beat
Morgan Stanley’s Simeon Gutman also remains constructive, reiterating a positive rating with a $3,605 target on September 16.
That target sits nearly 29% above Monday’s closing price. Oppenheimer’s reduced $3,500 objective also implies about 25% upside, despite its more cautious near-term forecasts.
That creates an unusual earnings debate, as analysts are lowering numbers without giving up on the stock.
The reason is that AutoZone is spending heavily on additional stores, Mega Hubs and commercial distribution capacity.
Investors have punished the near-term margin cost because the promised operating leverage has been slow to emerge.
Tuesday’s report must therefore show whether those investments are beginning to offset weakness in DIY.
Stronger commercial sales, easing gross-margin pressure and better expense leverage would matter more than a narrow headline EPS beat.
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