Auto parts company, AutoZone (NYSE:AZO) announced the planned step-down of its CEO, creating a transition in its top management. However, analyst optimism prevails as the company still stands strong in its aftermarket retail sector and the the new CEO appointment is seen as a positive, as it is likely to lead the company to higher growth.
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CEO Hands Over Mantle
Retailer of aftermarket automotive parts and accessories AutoZone announced that CEO Bill Rhodes will step down in January 2024 after serving for more than 18 years in the role. He will now transition to the executive chairman role.
Company veteran Philip Daniele, currently VP of merchandising, marketing, and supply chain teams, will succeed Rhodes. His appointment comes amid U.S. auto suppliers facing supply chain problems and higher material costs. He has been with the company for the past 29 years.
In its most recent quarter, AutoZone reported net sales expanded 5.8% for the quarter while net income rose 9.3% and diluted EPS was higher by 17.5%. Operating expenses, as a percentage of sales, stood at 31.5% compared to 31.6% in the prior-year quarter.
Is AutoZone a Good Company to Invest In?
Of the 13 Wall Street Analysts covering AZO stock, 11 rate it a Buy while two assign a Hold, taking the average analyst consensus rating to Strong Buy. Further, analysts’ 12-month average price target of $2,824.18 implies a 14% upside potential from current levels.
Post the CEO step-down announcement, Wells Fargo with a Buy rating (price target, $3,000) said that despite the news creating a negative ripple initially, there is much more to look forward. The new CEO, a company veteran, has significant experience in running the company’s internal division. Also, Rhodes will continue to look over the day-to-day operations as he continues in the Executive Chairman role.
Yesterday, Barclays reaffirmed a Buy rating on Autozone stock with a $2,721 price target marking a 9.9% upside potential from current levels. Also, within the last two weeks, AZO stock saw rating upgrades at UBS and Evercore ISI.
