O'Reilly Automotive's (ORLY) sales momentum and the easing of selling, general & administrative cost pressures should be viewed as a "net positive" for shares, RBC Capital Markets said in a note Wednesday.
The company's Q2 same-store sales are expected to rise by 3.9%, slightly above the 3.8% consensus estimate, and earnings of $0.78 per share in line with expectations, analysts said. Sales data also pointed to improving comp trends despite the above-average precipitation in April and May, RBC said, citing Bloomberg.
O'Reilly, which could incur a partial tariff impact in Q2 and a near-full impact in Q3, is working with suppliers to reduce costs and pass the price on to the consumers in real time, where necessary, according to the note.
China is the main concern with a potential 75% to 80% tariff, as most of the products that the company imports from Mexico are currently exempt under the United States-Mexico-Canada Agreement, the firm said.
RBC has an outperform rating on O'Reilly stock, with a price target of $98.
Price: 89.59, Change: -0.92, Percent Change: -1.01
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