On Friday, Wells Fargo adjusted its outlook on Monro Muffler (NASDAQ:MNRO) Brake Inc. (NASDAQ: MNRO), reducing the price target to $25 from the previous $30 while keeping an Equal Weight rating on the stock. The adjustment comes in the wake of Monro's fourth fiscal quarter performance, which showed a 7.2% decline in comparable store sales and earnings per share falling short by 4 cents compared to Wells Fargo's model.
The firm noted that the current underperformance in the stock market could be attributed to several factors. Initial fiscal quarter comparable sales have decreased by 12%, which is seen as a result of customers deferring purchases or opting for lower-priced tire alternatives. Additionally, there's an expectation of flat earnings per share for the first fiscal quarter, contrasting with the 40 cents anticipated by the Street.
Wells Fargo also pointed to uncertainties regarding the time frame for the normalization of the oversupply in off-price-point (OPP) tires and the financial pressures faced by low to middle-income consumers. The firm's revised forecast includes a significant reduction of 47% in the fiscal year 2025 earnings per share expectations.
The report concluded with Wells Fargo's stance to remain on the sidelines due to ongoing market share losses, which are highlighted by a 1,340 basis points decline compared to Census data, and the limited visibility into the company's future performance.
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