AAP Stock Forecast & Price Target

Advance Auto Parts has experienced substantial growth over recent years through both organic initiatives and strategic acquisitions, particularly noted with significant purchases such as General Parts International in 2014. The company anticipates improved comparable-store sales starting in the second half of 2025 as it moves past costly price investments while also implementing strategic initiatives that enhance merchandise and supply chain efficiency. Additionally, Advance is positioned for gross margin expansion of over 100 basis points in the second to fourth quarters, driven by efforts to achieve higher in-stock levels and lower operational costs, which together indicate strong potential for continued financial improvement.

Advance Auto Parts is facing a negative outlook primarily due to disappointing first-quarter guidance, which includes a projected same-store sales decline of approximately 2% and overall net sales expected around $2.5 billion, indicating weaker performance compared to internal forecasts. Compounding this issue, the company's operating margin is expected to be affected by costs associated with store and distribution center closures, totaling around $200 million, alongside an anticipated modestly negative EBIT margin. Furthermore, continued volatility in quarterly trends, attributed in part to weather, suggests a challenging environment ahead, with consensus forecasts predicting 2025 comps at the lower end of company guidance, reflecting a significant strain on operational efficiency.