Argus Says Advance Auto Parts' New CEO Is 'The Right Executive For The Job'

Argus maintains its Buy rating and $185 price target, saying the company has the ability to fix its operating problems and generate significant shareholder value.

Although the brokerage is not expecting an overnight turnaround, it expects to see a "succession of small victories over the next year, with a strong focus on product availability and in-stock levels."

"We believe that under the watchful eye of the new AAP Chairman, noted activist investor Jeffrey C. Smith, the CEO of Starboard Value, AAP's new CEO Tom Greco will apply his expertise from a 30-year career at PepsiCo, Inc. PEP to make AAP a more efficient and customer-focused company," analyst Christopher Graja wrote in a note.

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However, Graja cut his 2016 adjusted earnings estimate to $7.35 per share from $7.85, driven by lower-than-expected second-quarter earnings and a lower gross margin on the expectation of additional supply-chain spending. The current full-year consensus EPS estimate is $7.37.

The analyst also cut his third quarter EPS forecast to $1.78 from $1.99 and trimmed fourth quarter estimate to $1.14 from $1.25.

That said, the analyst continues to see upside for the shares, which is currently up 0.63 percent to $157.66 on Wednesday.

Full ratings data available on Benzinga Pro.