AZO - AutoZone is singled out by Bank of America as a potential Q3 underperformer

Bank of America is negative on AutoZone ( NYSE: AZO ) and called the stock one of its top ten U.S. ideas for Q3 on the down side.

The firm expects demand for do-it-yourself auto maintenance will continue to decelerate in the tough macro backdrop, which is seen pressuring revenue growth for AutoZone given that approximately 80% of its sales are to DIYers.

"AZO’s higher exposure to lower-income customers than peers also presents outsized risk to AZO’s sales as the benefit of last year’s (Spring 2021) stimulus is lapped and consumer budgets continue to be pressured by inflation in key cost centers such as food, fuel, and housing. In addition to deceleration in sales growth, we see risk to AZO’s margin profile."

Bank of America has an Underperform rating on AZO and price target of $1,795.

The general vibe on Wall Street is still positive on AZO with 16 Buy-equivalent ratings or higher stacking up against 7 Hold-equivalent ratings and 2 Sell-equivalent ratings.

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