Evercore's action and positioning
Evercore ISI has added O'Reilly Automotive (NASDAQ:ORLY) to its Tactical Underperform List while maintaining an Outperform rating and a $110.00 price target. The $110 target sits below an analyst high of $125 and well above an analyst low of $64. Evercore projects 5-10% downside for the shares in the wake of the company's forthcoming earnings report.
Near-term outlook and valuation indicators
Despite shares trading higher year-to-date, the firm sees limited near-term upside. The stock has gained roughly 9% year-to-date compared with a 0.5% rise for the XRT retail ETF, and other data show a year-to-date price return of 8.38% with a relative strength index that suggests the stock is in overbought territory. O'Reilly's price-to-earnings ratio stands at 34.47, indicating a premium valuation relative to many peers.
Evercore attributes recent outperformance to optimism around cold-weather demand, potential tariff pass-through, and excitement tied to OBBB-related developments. Those factors, the firm says, have helped the shares outpace the broader group, but they also raise the risk of a pullback following earnings.
Earnings expectations and guidance assumptions
Evercore expects O'Reilly to meet fourth-quarter consensus estimates of +4.5% comparable-store sales and $0.72 in earnings per share. With the company scheduled to report earnings on February 4 (noted as five days away from the firm's assessment), Evercore highlights that O'Reilly has delivered 6.19% revenue growth over the last twelve months.
For fiscal 2026 guidance, the firm anticipates O'Reilly will offer conservative targets - projecting comparable sales of 3-5% versus Street expectations of 4.5%. On earnings, Evercore models guidance of $3.05 per share before buybacks, or $3.10 to $3.15 including buybacks. That range sits below the Street consensus of $3.30, implying mid-single-digit downside to consensus earnings expectations.
Given that gap, Evercore says guidance could pressure the share price toward nearby support in the $90 to $95 area. For additional context, O'Reilly's current diluted EPS is $2.88, and analysts' forecasts for fiscal 2025 average $3.02.
Longer-term view and positioning
Even while flagging short-term risk, Evercore remains constructive on O'Reilly over a 12-18 month horizon. The firm includes the stock in its "Fab Five" portfolio of top picks, citing ongoing market share gains, reliable operational execution, and pricing power in a volatile consumer backdrop. Supporting that outlook, long-term metrics show strong returns over five- and ten-year horizons and a relatively low beta of 0.63.
Other analyst moves and company actions
Recent analyst activity and company actions add further context. RBC Capital raised its price target on O'Reilly to $111.00 while keeping an Outperform rating; RBC also adjusted its fourth-quarter comparable-sales estimate to 5.0% and increased its Q4 EPS estimate to $0.73, slightly above consensus. Wolfe Research downgraded the auto parts retail sector, citing concerns that potential price decreases could lead to price deflation. Baird initiated coverage of O'Reilly with an Outperform rating and a $115.00 price target, pointing to steady market-share consolidation and strong returns on invested capital.
On corporate activity, O'Reilly's Executive Chairman established a Rule 10b5-1 trading plan that allows the sale of up to 138,705 shares. Separately, the company's board authorized a $2 billion increase to its share repurchase program, bringing total repurchase authorization to $29.75 billion.
Takeaway
Evercore's tactical placement of O'Reilly on an Underperform list underscores a view that the stock faces near-term sensitivity to results and guidance, driven by a premium valuation and stretched technicals. At the same time, the firm retains a favorable medium-term view based on execution and market-share dynamics, and other broker actions show a mix of bullish price-target moves and sector-level caution.