11:08 AM EDT, 08/22/2024 (MT Newswires) -- Advance Auto Parts' ( AAP ) agreement to sell its Worldpac business is anticipated to improve its balance sheet but the expected proceeds fall below initial expectations, Wedbush said in a note Thursday.

The company had agreed to sell Worldpac to Carlyle Group ( CG ) for $1.5 billion, generating $1.2 billion in proceeds after taxes and fees, with the deal expected to close before the end of the year.

The transaction would improve the company's balance sheet and ease financing concerns, according to Wedbush.

"On the negative side, the business sold for only $1.5 [billion]; while this was higher than our last estimate of $1.4 [billion], it is well below initial price talk of [approximately more than] $2 billion and net proceeds of $1.2 [billion] are worse than we expected," Wedbush said in the note.

The Worldpac sale is not included yet in the company's lowered full-year guidance following mixed Q2 results that beat on the top line but missed on the bottom line, Wedbush said, adding the "very weak" margin outlook highlighted the challenges and costs of business turnaround.

Wedbush has a neutral rating on Advance Auto Parts ( AAP ) with a 12-month price target of $65.

Advance Auto Parts ( AAP ) shares were down nearly 16% in recent trading.

Price: 52.17, Change: -9.75, Percent Change: -15.75