AutoZone Stock Accelerates on Analyst Praise

The firm also raised its price target to $1,565 from $1,500

Assistant Editor
Oct 14, 2020 at 10:41 AM
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AutoZone Inc (NYSE:AZO) was added to Raymond James' current favorites list today, after upgrading the stock to "strong buy" from "outperform," with an added price-target hike to $1,565 from $1,500. The analyst in coverage threw in a sparkling review, saying that AutoZone is a proven, consistent, long-term retail stock that investors receive few chances to get at a discount. AZO is trading up 2.7% at $1,196.29, at last check.

Today's pop has AZO breaking out above pressure at the 20-day moving average for the first time since mid-September. Looking to extend past recent pressure at the $1,192 region, which kept a cap on gains this month alongside said moving average, the equity is now just above its year-to-date breakeven point.

Coming into today, analysts are definitely leaning bullish. Out of the 16 analysts in coverage, 11 carry a "buy" or better rating on AZO. Even further, the 12-month consensus price target of $1,392.88 is a 16.9% premium to current levels.

In the past 10 days, 1.16 calls have been bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 72% of readings from the past year, meaning options traders are picking up calls at a faster-than-usual rate. 

That said, speculating on AZO's next move with options could be a prudent play. The stock's Schaeffer's Volatility Index (SVI) of 29% stands higher than just 15% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 

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