Goldman Sachs Downgrades AutoZone due to Slower Growth Trends

Source: Davit Kirakosyan

Goldman Sachs analysts downgraded AutoZone (NYSE:AZO) to Sell from Neutral, adjusting their price target on the stock down to $2,917 from $3,205. The shift reflects a strategic reallocation toward companies more aligned with discretionary goods, where Goldman expects stronger growth as interest rates stabilize and consumer spending diversifies.
The analysts outlined several concerns about AutoZone’s outlook, beginning with a strain on lower-income consumers, who form a substantial part of AZO’s customer base. This demographic is likely to remain under financial pressure through 2025. Additionally, with car prices normalizing, the analysts anticipate a potential dip in repair demand, impacting AutoZone’s core revenue.
Customer sentiment metrics for AutoZone have also shown decline, with the brand’s NPS and NPI scores nearing three-year lows, according to HundredX data. Furthermore, Goldman Sachs sees potential financial strain as the company faces upcoming 2025 debt obligations, raising concerns about interest expenses and the impact on stock buybacks.
The valuation analysis points to elevated levels for AZO shares, which Goldman finds hard to justify amid slower growth and heightened risks.

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