Our $3,900 target price is based on ~23x FY26 EPS or ~22x CY26 EPS, which is a premium to the stock's 5 year avg. based on a strengthening gross margin profile, share gains in the overall auto parts retail backdrop, and a strong shareholder return profile. We recognize this multiple is a premium to AZO's historic average, but it is still a discount to ORLY's current valuation and high quality retail peers. 

The main downside risks we see to our rating/target price are a slower-than-expected recovery in miles driven, weaker performance of DIY than expected, the macro risk of rising gas prices, and greater-than-expected gross margin pressure over the course from mix, the loyalty program, and other transitory items.