Mizuho reduced its price target on O’Reilly Automotive to $105.00 from $110.00 on Friday, but left its Outperform rating intact. The change in valuation assumptions comes after the company’s quarterly earnings call earlier that morning, where management provided additional detail on near-term expense dynamics.
The stock is trading at a price-to-earnings ratio of 32.57, a level the market views as elevated relative to the company’s expected near-term earnings growth. Management’s commentary prompted Mizuho to revise its forecasts to incorporate a higher operating cost base over upcoming quarters.
Operationally, O’Reilly continues to show steady revenue momentum. The business has generated revenue growth of 6.42% over the last twelve months and reported a gross profit margin of 51.59%. Mizuho highlighted the strength of the commercial segment, which delivered double-digit comparable sales growth for the second straight quarter. The do-it-yourself segment produced low-single-digit comparable sales gains, remaining in line with third-quarter results.
Despite the downward tweak to the price objective, Mizuho noted that O’Reilly still provides "relative safety in a tricky consumer tape," pointing to stable top-line trends and management’s guidance that annual growth should come in around 3-5%.
Management warned that self-insurance costs and other operating expenses could rise through the balance of the year. Those comments led Mizuho to increase the expense assumptions embedded in its models, driving the reduction to the firm’s price target even as the underlying sales performance remained solid.
In company-reported fourth-quarter 2025 results, O’Reilly posted mixed outcomes versus analyst expectations. The company reported earnings per share of $0.71, narrowly missing the projected $0.72. Revenue for the quarter came in at $4.41 billion, slightly above the $4.39 billion consensus estimate.
Separately, Evercore ISI removed O’Reilly from its TAP Underperform List and maintained an Outperform rating with a $110.00 price target. Together, the analyst actions and the company’s quarterly metrics underscore a balance between steady top-line performance and mounting expense uncertainty.
Contextual takeaway: The adjustment from Mizuho reflects an increased emphasis on expense risk rather than deterioration in sales trends. Investors will be watching margin drivers and the trajectory of self-insurance and other operating costs as key determinants of near-term earnings performance.