Advance Auto Parts Surpasses Analyst Target: What’s Next for Investors?
Recently, shares of Advance Auto Parts Inc (Symbol: AAP) hit $47.44, exceeding the average analyst 12-month target price of $46.78. This raises a question for analysts and investors alike: How should they respond when stock prices approach or surpass these targets?
Understanding Analyst Reactions
When a stock reaches a target set by analysts, they typically have two choices: either downgrade the stock based on its valuation or adjust their targets upward. The decision often hinges on recent business developments that may influence stock performance. If there are positive signs for Advance Auto Parts, it could warrant a new, higher target price.
Diverse Analyst Targets for AAP
Within the Zacks coverage universe, 18 analysts contribute to the average target for Advance Auto Parts. This average of $46.78 masks a range of opinions. Some analysts have a bearish outlook, with one setting a target as low as $35.00. Conversely, there are optimistic views, with one analyst forecasting a price of $70.00. The overall standard deviation stands at $10.63, indicating considerable disagreement among experts.
The Wisdom of Crowds: Analyzing Stock Targets
The reason for examining the average target price lies in the collective insight from multiple analysts, rather than relying on a single perspective. With AAP now trading above the average target, it prompts investors to evaluate whether this is merely a step towards even higher prices or an indication that the stock’s valuation may be overstretched. Below is a summary of current analyst ratings for Advance Auto Parts Inc:
| Recent AAP Analyst Ratings Breakdown | ||||
|---|---|---|---|---|
| » | Current | 1 Month Ago | 2 Month Ago | 3 Month Ago |
| Strong buy ratings: | 2 | 2 | 1 | 1 |
| Buy ratings: | 0 | 0 | 0 | 0 |
| Hold ratings: | 19 | 19 | 19 | 19 |
| Sell ratings: | 1 | 1 | 1 | 1 |
| Strong sell ratings: | 1 | 1 | 1 | 1 |
| Average rating: | 2.96 | 2.96 | 3.05 | 3.05 |
The average rating in the table above is measured on a scale from 1 to 5, where 1 indicates a Strong Buy and 5 indicates a Strong Sell. Data in this article is sourced from Zacks Investment Research via Quandl.com. For detailed insights, click to get the latest Zacks research report on AAP — FREE.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
