Raymond James moved Genuine Parts Company to a Strong Buy rating from Outperform and set a $145 price target, applying a sum-of-the-parts framework that reflects the company's announced plan to separate its Auto and Industrial divisions. The brokerage said the current setup presents a "constructively asymmetric" opportunity because the implied market valuation of the Auto business appears materially lower than comparable companies.
Shares of Genuine Parts rose 2% to $119 on Tuesday, after having declined roughly 20% since the company reported fourth-quarter results - a slide that has occurred even as management disclosed the planned split of operations.
Raymond James' valuation breaks the business into three pieces. It assigns the Motion industrial segment about 15 times forward EBITDA, which the firm notes is a discount to Applied Industrial Technologies, a direct peer trading near 17 times. For the Auto operations, the brokerage applies 10 times EBITDA to the North America Auto business - a multiple it says is in line with Advance Auto Parts - and 8 times EBITDA to the International Auto unit.
Using those assumptions, Raymond James arrives at a fair value near $145 per share. That figure incorporates an estimated $50 million of stranded costs related to the separation. The bank also highlights that if Motion is valued at 15 times EBITDA, current market pricing would imply roughly 4.5 times EBITDA for the combined Auto businesses, compared with about 15 times for peers such as O'Reilly Automotive and AutoZone.
On timing, Raymond James expects the separation to be completed by the first quarter of 2027. The firm said investor days for the two newly independent companies are planned for the second half of 2026.
Separately, Raymond James referenced early 2026 indicators that may point to an inflection in industrial demand. The brokerage cited stronger U.S. manufacturing production and improving rail traffic trends, noting that Motion's organic growth historically tracks industrial production and pricing metrics.
The analysis is not without downside sensitivity. Raymond James flagged several risks that could pressure the valuation, including sustained weakness in the European auto aftermarket, possible pricing pressure in North America and the prospect that Motion could trade closer to its historical average multiple. The brokerage notes that even if Motion were valued at a lower multiple near 11.5 times, its model still implies a share price around $120 - which would remain above the current trading level.
Questions about whether Genuine Parts is a bargain now are being framed through valuation tools that apply multiple scenarios to the break-up plan. The firm’s work places clear emphasis on relative multiples across industrial and auto aftermarket peers as the key determinant of upside.