RBC Capital Management has bumped its target price for O’Reilly Automotive (NASDAQ:ORLY) to $111.00 from $110.00, retaining an Outperform rating on the auto parts retailer. The stock is trading around $98.85, with a market capitalization of $83.44 billion, and is nearing its 52-week high of $108.72. According to InvestingPro data cited in the update, the stock’s relative strength index (RSI) indicates it may be in overbought territory.
In its latest model adjustments, RBC raised its comparable-sales estimate for the fourth quarter to 5.0% growth, up from a prior 4.5%, which the firm noted is in line with consensus. The bank also increased its fourth-quarter earnings-per-share estimate to $0.73 from $0.71, compared with the consensus EPS estimate of $0.72.
RBC highlighted O’Reilly’s recent operating performance, noting the company has delivered 6.19% revenue growth over the past twelve months and trades at a price-to-earnings multiple of 34.47, reflecting a relatively high valuation on earnings.
Analyst Steven Shemesh cautioned that selling, general and administrative expenses could run higher than RBC currently anticipates, but added that the first quarter looks to be "a very strong start." The firm subsequently increased its first-quarter comparable-sales growth projection to 5.9%, above the consensus view of 5.0%.
RBC argued that the stronger-than-expected start to the year should help offset any incremental cost pressure, particularly if management signals more normalized SG&A-per-store growth in 2026. Looking further ahead, RBC expects company guidance for 2026 comparable-sales growth to land in a 2% to 4% range, embedding conservatism as O’Reilly cycles through same-SKU inflation in the second half of the year. The bank projects earnings-per-share growth of 5% to 7% for the period.
Corporate actions and insider activity featured in the company’s recent disclosures. O’Reilly’s board approved a $2.0 billion increase to its share repurchase authorization, taking the total buyback capacity to $29.75 billion; this additional authorization is effective for a three-year period. Separately, Greg Henslee, Executive Chairman of O’Reilly Automotive, has put in place a trading plan to sell up to 138,705 shares between March and April 2026 as part of a strategic exercise of stock options.
Analyst coverage and sector calls have been active. Baird initiated coverage of O’Reilly with an Outperform rating, pointing to the company’s strong return on invested capital and ongoing market share consolidation. Raymond James upgraded the stock to Outperform as well, citing expected pricing tailwinds that could support sales growth into early 2026. Conversely, Wolfe Research trimmed its view on the broader auto parts retail sector to Market Weight, expressing concern about potential price declines.
Taken together, the mix of heightened analyst attention, the expanded repurchase program, and management insider selling underscore both strategic capital allocation choices and market dynamics shaping O’Reilly and the auto parts retail sector. RBC’s modest price-target increase and upward revisions to near-term comp and EPS estimates signal confidence in the company’s revenue momentum while explicitly recognizing cost uncertainties that could pressure margins.
Summary
RBC Capital raised its price target on O’Reilly Automotive to $111 from $110 and maintained an Outperform rating, increasing Q4 comparable-sales and EPS estimates. The firm noted Q1 momentum but warned of potential SG&A headwinds. The company also expanded its buyback authorization by $2.0 billion to $29.75 billion and disclosed an Executive Chairman trading plan for up to 138,705 shares in 2026. Other analysts have adjusted coverage of the stock and the sector, with some bullish and some more cautious moves.
Key points
- RBC lifted the target price on ORLY to $111 and kept an Outperform rating; Q4 comp-sales est. raised to 5.0% and EPS to $0.73.
- Company fundamentals include 6.19% revenue growth over the last twelve months and a P/E of 34.47; stock trading near 52-week high with RSI suggesting overbought conditions.
- Board increased share repurchase authorization by $2.0 billion to $29.75 billion; Executive Chairman established a trading plan to sell up to 138,705 shares between March and April 2026.
Risks and uncertainties
- SG&A expenses could be higher than RBC currently forecasts, which would pressure margins and earnings - a risk to the company and retail margins.
- Wolfe Research’s downgrade of the auto parts retail sector to Market Weight reflects concern about potential price decreases, which could compress revenue and margin trends across the industry.
- O’Reilly must manage same-SKU inflation cycles in the second half of the year; RBC’s guidance assumptions for 2026 include conservative comps growth to account for this uncertainty.