RBC Capital has revised down its 12-month price target on O’Reilly Automotive to $109.00 from $111.00 while keeping its rating unchanged. The new target implies roughly 18% upside from the stock's most recently cited level of $92.61, though the shares are trading at a relatively rich multiple versus near-term growth expectations.
The change follows O’Reilly’s quarterly report, which delivered revenue above expectations but missed the more elevated investor profit forecast. RBC said market participants appeared to have overestimated the comparable-sales lift tied to same-SKU inflation and underestimated the duration of higher operating costs.
RBC modestly raised its estimate for first-quarter comparable sales to +6.4% from +5.9%, but trimmed its Q1 EPS projection to $0.70 from $0.72. For fiscal years 2026 and 2027 the firm now models comparable sales growth of +4.8% and +4.0% respectively, and forecasts EPS of $3.24 for 2026 and $3.63 for 2027. The 2026 EPS projection of $3.24 sits close to the prevailing consensus estimate of $3.22 for that year.
The bank's $109 target is explicitly based on roughly 30 times its revised 2027 EPS forecast of $3.63. RBC noted that while its near-term numbers are being curtailed, its longer-term view of the business remains consistent with prior assessments.
Market metrics underline the valuation tension. The company's current price-to-earnings ratio is 31.09, a level that has been characterized as a high earnings multiple relative to short-term growth prospects. O’Reilly has, however, shown steady revenue expansion, with sales up 6.42% over the last 12 months. The stock also exhibits historically low volatility with a beta of 0.62.
Analysts expect consensus estimates to be pared back modestly following the quarter as firms factor in the retailer’s expense challenges. In O’Reilly’s reported fourth-quarter 2025 results, EPS came in at $0.71, narrowly missing an expectation of $0.72, while revenue of $4.41 billion beat the $4.39 billion forecast. The top-line outperformance was offset by expense overruns that weighed on operating income.
Brokerage reactions since the earnings release have been mixed but generally constructive on the company’s sales performance. DA Davidson reiterated a Buy rating and holds a $110.00 price target despite noting expense headwinds. Mizuho lowered its price target to $105.00 from $110.00 while maintaining an Outperform rating, citing a higher expense outlook. Evercore ISI preserved its Outperform stance and $110.00 target, and removed O’Reilly from its Underperform list.
Collectively, those moves underscore a bifurcated view: strong demand and revenue trends on one hand, and cost pressures on the other. Investors will be watching how management addresses expense dynamics and whether comparable-sales benefits from SKU-level pricing persist at the previously expected magnitude.
Summary
RBC lowered its O’Reilly Automotive price target to $109 from $111 while maintaining its rating after the retailer reported a revenue beat but marginally missed EPS expectations. The firm adjusted near-term EPS and comparable-sales assumptions, flagged sustained elevated costs, and based its target on 30 times 2027 EPS of $3.63. Other brokerages largely retained favorable ratings but trimmed some targets, reflecting mixed sentiment driven by strong sales and expense pressures.
Key points
- RBC cut its price target to $109 and kept its rating unchanged; the target implies about 18% upside from the recent share price.
- RBC raised its Q1 comparable-sales estimate to +6.4% but lowered Q1 EPS to $0.70 and set FY2026 and FY2027 EPS at $3.24 and $3.63 respectively.
- Other broker actions were mixed: DA Davidson reiterated Buy with a $110 target, Mizuho trimmed its target to $105 while staying Outperform, and Evercore ISI maintained Outperform with a $110 target.
Risks and uncertainties
- Persistent elevated operating costs that have pressured operating income and prompted analysts to lower near-term earnings estimates - this affects the retail auto parts sector and related suppliers.
- Potential for downward revisions to consensus estimates following the earnings report if expense trends continue - this could influence investor sentiment across consumer discretionary and retail stocks.
- Valuation risk as the company trades at a high P/E relative to short-term growth, which may increase sensitivity to execution on cost controls and sales delivery - relevant to equity investors and portfolio managers.
Investors and market participants will be monitoring upcoming quarterly updates and management commentary for signs that expense pressures are abating or being offset by durable sales gains.