Evercore ISI has lifted its 12-month price objective on Advance Auto Parts (AAP) to $60.00 from $56.00 while preserving an "In Line" rating as the auto parts retailer approaches its fourth-quarter earnings announcement, which is slated for this Friday before the market opens. The firm highlighted recent operational momentum while continuing to flag balance-sheet and margin considerations.
According to InvestingPro figures cited by research notes, Advance Auto Parts shares were trading at $56.60, a level Evercore ISI characterizes as near the stock's Fair Value. The company’s upcoming quarterly results are expected in just two days.
Performance and recent drivers
Evercore ISI observed that Advance Auto Parts has outperformed the market year-to-date, with its stock up 44% compared with a roughly 1% gain for the S&P over the same period. The research team attributed part of the improved investor sentiment to the retailer distancing itself from concerns that surfaced last quarter related to a parts vendor bankruptcy and broader worries around consumer credit.
The firm noted a late fourth-quarter surge in demand that could allow Advance Auto Parts to deliver modest upside relative to Street comparable sales and earnings-per-share estimates. Evercore ISI also pointed to solid sales data into January, which the firm said may have been supported by the seasonal boost from tax refunds.
Profitability outlook and modelling
Advance Auto Parts has not reported profitability over the trailing twelve months, with a basic EPS of -$9.55. Nevertheless, analysts in the Street consensus expect the company to return to profitability this year. Evercore ISI's own forecasts call for EPS of $2.80 in calendar year 2026 and $4.15 in 2027, compared with Street estimates of $2.70 and $4.10, respectively.
On margins, Evercore ISI models suggest EBIT margin will track to roughly 4% in 2026 and near 5% in 2027. The current EPS projection for fiscal year 2025, per InvestingPro data, is $1.83, which would represent a return to positive earnings for the company.
Balance sheet and capital considerations
Despite the more constructive operational tone, Evercore ISI emphasized that Advance Auto Parts remains the only non-Investment Grade rated corporate issuer among the four largest auto parts retailers. The firm's adjusted net debt to EBITDAR was 2.6x as of the third quarter, a leverage metric it noted is higher than peer levels.
InvestingPro data included in the research shows the company’s debt-to-equity ratio at 2.58, while the current ratio stands at 1.73, indicating that liquid assets exceed short-term obligations. The company has also sustained dividend payments for 21 consecutive years and offers a current dividend yield of 1.77%.
Product rollout and industry responses
Advance Auto Parts plans to introduce ARGOS, a private-label oil and fluids brand, at all Advance and Carquest locations in the United States by early 2026. The staged rollout begins in February with synthetic blend and full synthetic heavy-duty motor oils, expands to passenger car motor oil by early March, and aims to complete the full portfolio by May.
Analysts across the industry continue to recalibrate views on Advance Auto Parts. UBS retained a Neutral rating with a $65 price target, while Truist Securities reiterated a Hold rating and set a $48 price target. RBC Capital trimmed its price target to $57 from $60, keeping a Sector Perform rating and flagging softer transaction data. DA Davidson lowered its price target to $47 from $55 and maintained a Neutral rating, citing margin pressures and forecasting an improvement in margins from 2.3% in 2025 to just over 6% by 2030.
These analyst movements reflect ongoing debate about the pace and consistency of AAP’s turnaround. Truist, for instance, projects 2.5% comparable sales growth for the fourth quarter, supported by same-SKU inflation, illustrating divergent expectations for near-term top-line durability.
What to watch
Investors and analysts will be watching the upcoming quarterly release for signs that recent sales momentum and the early stages of the ARGOS rollout are translating into sustainable improvement in comps and margins. At the same time, leverage metrics and the path to consistent profitability remain central to the firm's investment thesis and how ratings may evolve.