AutoZone Inc. (AZO) is positioned to gain market share as investments in stores, distribution and technology begin paying off, Bank of America said Monday, reinstating coverage with a Buy rating.

The brokerage set a $3,800 price forecast, implying about 19% upside from the $3,200.76 share price cited in its report. It expects annual sales growth of 6% to 7%, supported by an aging vehicle fleet, less affordable cars and continued store expansion.

Commercial Sales Drive Growth

Bank of America sees AutoZone's commercial business, which serves professional repair customers, as its biggest growth opportunity. The retailer holds just 5% of that fragmented market, leaving room for further gains.

The brokerage forecasts commercial sales growth of 10% to 12% annually over the next three years. A larger network of distribution hubs should improve parts availability and shorten delivery times, helping AutoZone outpace the broader market.

As commercial sales account for more of the business, Bank of America expects overall revenue growth to accelerate.

Valuation Offers Upside

The brokerage considers AutoZone undervalued at roughly 17 times its estimated fiscal 2028 earnings. Its $3,800 price forecast values the company at 20 times those earnings.

Bank of America expects earnings per share to rise to $168.03 in fiscal 2027 and $190.23 in fiscal 2028, from $152.55 in fiscal 2026. Continued market share gains could also encourage investors to assign the stock a higher valuation.

Consumer Pressure Remains

Still, the brokerage warned that AutoZone's do-it-yourself business faces an uneven outlook.

Higher parts prices should support sales. However, elevated gasoline prices and broader inflation could push customers toward cheaper products or cause them to postpone repairs.

A warmer winter could also create near-term volatility. Bank of America expects sustained double-digit commercial growth to help offset those pressures.