Bank of America analyst Christopher Nardone resumed coverage of O'Reilly Automotive on Monday with a Buy rating and a $106 price target. The target implies approximately 17.9% upside from a reference share price of $89.92. Nardone said strong execution, resilient comparable store sales growth, a favorable revenue mix and an advanced distribution network support a valuation premium over peers. The retailer's next catalyst is third-quarter earnings on October 28.
Bank of America identified O'Reilly's professional customer business as an important source of growth. Sales to professional customers totaled $8.6 billion in 2025. Professional customer sales accounted for 50.5% of second-quarter revenue and increased 12.5% year over year. The second quarter was the fourth successive quarter with double-digit comparable sales growth in the professional business. Nardone estimates O'Reilly's share of the professional automotive aftermarket at less than 10%, indicating considerable room for expansion and market share gains.
Bank of America expects increasingly complex parts and repairs, together with declining interest in do-it-yourself repairs, to benefit the professional market. Bank of America views O'Reilly's smaller do-it-yourself revenue share as beneficial because inflation and higher gasoline prices could constrain consumer spending over the long term. Nardone identified more than 32 regional distribution centers and more than 400 hub stores as an important competitive advantage.
O'Reilly targets 225 to 235 net store additions in 2026, compared with 207 in 2025. Bank of America expects selling, general and administrative expenses to stay elevated. However, Bank of America forecasts per-store expense growth to slow from 5% in the first half of 2026 to approximately 3% in the second half. Nardone said O'Reilly continues to focus on small tuck-in acquisitions in markets where the retailer is expanding. Nardone said O'Reilly has no plans for a large transformative acquisition over the near to medium term.
Bank of America forecasts comparable store sales growth of 4% to 5% through 2028, supported by market share gains, professional demand and potentially higher auto parts inflation. O'Reilly forecasts comparable store sales growth of 4% to 6%. O'Reilly expects same-SKU inflation to ease from 5.5% to between 1% and 2% in the second half of 2026. Bank of America believes the projections could be conservative as industry expectations for same-SKU inflation rise. Advance Auto Parts and AutoZone recently raised same-SKU inflation expectations by roughly 100 basis points.
O'Reilly has maintained strong free cash flow despite doubling capital expenditure since fiscal 2022 to expand the distribution network and store base. Management forecasts fiscal 2026 free cash flow of $1.8 billion to $2.1 billion. Management expects fiscal 2026 capital expenditures of $1.3 billion to $1.4 billion. Bank of America expects O'Reilly to gain further share in a highly fragmented market and experience a sustained period of upward earnings-per-share revisions.
Nardone forecasts 2026 earnings per share of $3.27, an increase of 10.1%. Nardone projects 2027 earnings per share of $3.64, an increase of 11.3%. Nardone forecasts 2028 earnings per share of $4.05, an increase of 11.3%. The $106 target values O'Reilly at 29 times estimated 2027 earnings, above consumer companies with comparable growth.
Benzinga Pro data showed O'Reilly shares trading at $90.53, up 0.68%, at publication on Monday.
Bank of America Resumes O'Reilly Automotive Coverage at Buy with $106 Target
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Summary
Bank of America analyst Christopher Nardone resumed coverage of O'Reilly Automotive with a Buy rating and a $106 price target, suggesting a 17.9% upside from a $89.92 reference price. The analyst highlighted strong execution, resilient comp sales, favorable revenue mix, and a top-tier distribution network. Professional customer sales, which made up 50.5% of Q2 revenue and rose 12.5% YoY, are a key growth driver. The fear and greed index remains a watch item for broader market sentiment, while crypto price movements continue to influence investor behavior. O'Reilly’s next catalyst is Q3 earnings on October 28.
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