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An earnings-based deep dive for O’Reilly Automotive (NASDAQ:ORLY -10.6%) is a great opportunity for investors, according to to UBS.
Springfield, Missouri-based auto parts retailer miss both top and bottom lines expectations on Wednesday night, citing weather and troubled macroeconomics, were disappointing. Shares fell more than 10% Thursday morning as a result of the drop.
However, UBS analyst Michael Lasser argued that the bullish case has not yet been broken in a note to clients on Thursday.
“We believe a recovery in mobility and limited new vehicle sales will support industry trends,” Lasser wrote. “As such, we will take advantage of a sale.”
He noted that while macro difficulties are certainly an issue, maintaining the company’s 2022 guidance should maintain confidence in management. Additionally, Lasser points to corporate price changes as key to offsetting the inflationary impact. He suggested the company’s track record in cost control should boost confidence on this front.
Overall, Lasser advises investors not to overestimate missed quarterly earnings, calling it “a small boost.” He retains a Buy rating on the stock along with a $790 price target, $150 above Thursday’s price.
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