12:26 PM EDT, 09/25/2024 (MT Newswires) -- AutoZone ( AZO ) is facing near-term temporary headwinds that could impact earnings-per-share estimates for fiscal 2025 and 2026, Morgan Stanley said in a note Wednesday.

The investment bank said its EPS estimates are coming down by about 5% and 2%, respectively, mainly due to foreign exchange and last-in-first-out.

Morgan Stanley said that amid a depreciating Mexican peso against the dollar, it forecasts "relatively flat" earnings before interest and taxes growth for fiscal 2025 even though the international business continues to grow.

The firm added that the company will lap LIFO credits of about $40 million for fiscal 2025, limiting the expansion of its gross margin.

"Put together, this will result in a more muted [fiscal 2025] than initially expected," the firm said.

Morgan Stanley raised its price target on AutoZone ( AZO ) to $3,125 from $3,038 while maintaining its overweight rating.

Price: 3094.56, Change: +50.59, Percent Change: +1.66