Shares of Advance Auto Parts (AAP 4.33%) were sliding today on a broad sell-off in the stock market related to renewed fears of a trade war, and as one Wall Street analyst lowered their price target on the stock.
As a result, shares of Advance Auto Parts were down 6.9% as of 1:49 p.m. ET.
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Tariffs pose a renewed threat
The broad market tumbled on Tuesday, with the S&P 500 falling 1.8% as President Trump's threat to gain control of Greenland has sparked new concerns about a trade war.
Trump has proposed a tariff on eight European countries, and Europe could respond in kind.
Like other auto parts stocks, Advance Auto Parts has exposure to tariffs, though it primarily sources products from China, Canada, and Mexico, rather than Europe. Trump's willingness to embrace import taxes shows that a trade war could flare again.
Additionally, TD Cowen analyst Max Rakhlenko lowered the firm's price target from $62 to $46, reflecting the stock's pullback in recent months and part of a broader adjustment on the hardlines sector.
NYSE: AAP
Key Data Points
What's next for Advance Auto Parts
Advance has been a longtime laggard in its sector as it's struggled to compete with O'Reilly Automotive and AutoZone despite having a large number of stores.
Nonetheless, the company's recent results have been encouraging, delivering comparable sales growth of 3% in the third quarter and an increase in its full-year bottom-line guidance.
The aftermarket auto parts sector also tends to do well in weak economies, which should favor Advance if a recession hits.
Investors should look past today's sell-off and focus on the company's turnaround efforts. We should get an update from the company in early February when it releases fourth-quarter results.
