O'Reilly Automotive's (ORLY) outlook has less uncertainty than most other retailers, and the stock has a favorable risk/reward profile, UBS said in a Thursday note.
The company began increasing prices in Q1 as a response to 10% baseline tariffs, and will continue with more in Q2, UBS analysts said. O'Reilly stated that there was nothing currently that would hinder it from maintaining its margin rates, they noted.
The analysts expect the company to closely monitor signs of more deferred maintenance or trading down to lower-priced products. However, the company said its customers continue to prioritize higher-quality products on the value spectrum, they said.
The analysts also noted that the company's upcoming stock split will make the stock more accessible to employees and investors. There is "much to look forward to" regarding the company's outlook, given the stable industry fundamentals, rising prices, and supply chain leverage, they said.
UBS maintained the company's stock rating at buy and the price target at $1,580.
Price: 1334.62, Change: -17.56, Percent Change: -1.30
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