USB Piper downgraded AutoZone (AZO ) to market perform from strong buy.
Analyst Reed Anderson says first-quarter retail comparisons are surprisingly weak, below anticipated levels, which will likely lead to valuation compression. Accordingly, he downgraded, and cut the $109 target to $91.
Anderson says he still likes AutoZone, but says investors are most concerned with comparisons, especially in the retail business. He says he can't ignore the fact that comparisons have slipped to very modest levels, while a couple of competitors are exhibiting upper single-digit gains.
Until he's better able to reconcile this gap and get visibility that AutoZone's retail comparisons are strengthening, Anderson feels the stock is likely to mark time within a fairly narrow range.