Why Advance Auto Shares Won't Slow Down

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Advance Auto Parts  (NYSE: AAP  ) opened up slightly this morning after Wedbush upgraded the auto-parts retailer from underperform to outperform.

So what: Along with the upgrade, analyst Seth Basham raised his price target on the stock to $120 (from $70), representing about 25% worth of upside to Wednesday's close. While value investors might be turned off by the stock's 17% surge yesterday, fueled by the purchase of General Parts International, Basham sees plenty of upside left given the acquisition's "transformational" potential.

Now what: The deal -- which is expected to close late this year or early 2014 -- will create the biggest auto-parts provider in North America. "The acquisition is not only transformational for its relative size and the cost synergies that likely will ensue, but also for the complementary nature of GPI's assets to AAP," Wedbush noted. "GPI gives AAP delivery scale, geographic breadth and new market opportunities, in our view, while also giving it a much bigger presence in the faster-growing commercial segment." But given how fast the stock is speeding at the moment, I'd wait for some of the enthusiasm to fade before buying into that bullishness. 

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