Investors in Advance Auto Parts (AAP 1.26%) are enjoying a bumpy ride so far in 2026. The stock declined sharply yesterday on the back of a price target cut from a Wall Street analyst, only to rise as much as 8.2% by 10:30 today after another analyst upgraded the stock.
Northcoast Research upgrades Advance Auto Parts
An analyst from Northcoast, Aaron Reed, upgraded the stock to a "buy" from "neutral" and put a $55 price target on it, implying more than 20% upside potential for the stock. Reed's argument that the company's restructuring strategy supports the stock's prospects makes sense, and Advance Auto Parts is a dirt cheap stock that deep value investors will want to take a look at.
NYSE: AAP
Key Data Points
Is Advance Auto Parts stock a buy?
The turnaround at the company -- based on the idea that it merely needs to match the operational performance of peers like AutoZone and O'Reilly Automotive to be a great value -- has proved elusive. In fact, for over a decade.
That said, CEO Shane O'Kelly's plans, which include closing more than 700 locations and opening new ones in geographic areas where the company has a strong position, are more comprehensive than anything the company has tried before. In addition, the creation of larger "market hub" stores will help achieve the holy grail of auto parts retailing: increasing same-day delivery of auto parts, particularly to professional users.
Image source: Getty Images.
The potential for improvement is there, but so is the potential for more disappointment from a company with an underperforming track record. There's also a near-term cautionary note here: 3M reported earnings yesterday, and management mentioned a weak auto aftermarket, which could presage some weakness when Advance Auto next reports.
Still, if you like the value here, it makes sense to monitor what the company and its peers say about the market before buying into the stock.
