Advance Auto Parts (AAP) could post modest Q1 comparable sales growth supported by favorable weather and industry demand trends, though "tougher" inflation comparisons and higher gas prices may pressure margins and earnings, RBC Capital Markets said in a note Tuesday.

The firm forecasts Q1 comparable sales growth of 2%, slightly above the 1.9% consensus estimate, while adjusted operating margin is projected to rise 250 basis points year over year to 2.2%, below the 2.6% consensus. Adjusted earnings per share are expected at $0.31, compared with consensus expectations of $0.43, analysts said.

RBC expects Q2 comparable sales growth of 2%, operating margin of 4.7% and adjusted earnings per share of $0.85, while anticipating management to reaffirm 2026 guidance.

Many of the company's sales and margin initiatives are beginning to show "promise," but the firm said it remains "cautiously optimistic" about management's efforts to recapture market share and reduce costs.

RBC lowered its price target to $62 from $63, supporting its sector perform rating on the stock.

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