11:51 AM EST, 12/11/2024 (MT Newswires) -- AutoZone's ( AZO ) fiscal Q1 results slightly missed consensus expectations but aligned with buy-side expectations as sales were pressured by industry-wide softness and unusually warm weather in the Midwest, mid-Atlantic, and northeast, Wedbush said in a note emailed Wednesday.

AutoZone's ( AZO ) $1 billion capital expenditure plans that focus on information technology, inventory, distribution, new stores and "megahubs" network expansion could create modest margin pressure if sales remain soft, the investment firm added.

Wedbush said the company's gross margins improved to 53% despite foreign exchange pressure, commercial price deflation, and the absence of a prior-year last-in-first-out benefit.

"While auto parts retailers are better equipped to manage through tariffs than other retailers with high Chinese import exposure, it is very unlikely that auto parts retailers can maintain gross margins if tariffs are 60% plus," the firm said.

Wedbush increased its price target on AutoZone's ( AZO ) shares to $3,700 from $3,200 with an outperform rating.

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