Genuine Parts' (GPC) current outlook appears "too optimistic" and the company may lower its guidance to something more achievable, UBS said in a Tuesday note, noting that the company's Q2 results are not likely to exceed expectations.

The company's outlook assumes three positive factors kicking in H2: inflation from tariff-induced inflation, reduced economic uncertainty, and lower interest rates, UBS analysts said. Of the three, only price inflation appears to be happening, they said.

National Automotive Parts Association, a division of the company, is making progress acquiring and integrating its independent operators, but its US segment is losing some market share to O'Reilly Automotive (ORLY) and AutoZone (AZO), the analysts said. This will likely continue until Genuine Parts gains more control over the stores, they said.

Demand in the industrial segment is still subdued, and an initial positive trend in the first two months of the year may have caused "misplaced optimism" about industrial demand improving in H2, the analysts said.

Overall, the company is fighting to maintain market share across it businesses in North America, and it will need more time and investment to compete with its bigger peers, the analysts said. The stock will likely be range-bound in the near term, they said.

UBS maintained the company's stock rating at neutral and price target at $125.

Price: 122.18, Change: -0.05, Percent Change: -0.04