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Investing.com -- Goldman Sachs downgraded Genuine Parts Co (NYSE:GPC) to "Sell" from "Neutral" while upgraded AutoZone Inc (NYSE:AZO) to "Neutral" from "Sell" citing differing levels of cyclicality and defensive positioning in the current economic environment.

While both companies operate within the defensive auto parts retail sector, Genuine Parts’ industrial business makes it more exposed to economic downturns, pointing to risks in its 2025 guidance, as a strong second-half recovery may not materialize.

Goldman Sachs (NYSE:GS) lowered GPC’s rating to "Sell," citing weaker performance in its NAPA auto parts business, slowing trends in its European automotive segment, and concerns over its industrial division’s exposure to macroeconomic uncertainty.

The brokerage new price target of $114 implies a 4% downside.

The analysts also flagged that GPC’s 2025 outlook relies on steady improvements in end-market demand, a scenario they see as uncertain. With same-store sales running below management’s expectations, further downside risks remain if macroeconomic pressures persist.

AutoZone received an upgrade to "Neutral," with Goldman citing its historical resilience in economic downturns, a changing competitive landscape due to a key competitor’s exit, and its ability to pass through higher prices.

The firm highlighted that AutoZone could benefit from new tariffs, particularly the recently announced 25% auto tariff, which may lead to higher car prices and increased demand for auto parts.

The firm also noted that GPC’s U.S. automotive segment remains largely dependent on independently operated stores, which account for approximately 65% of its store base.

While this model benefits from local market expertise, demand fluctuations and inventory pullbacks from independent owners pose potential risks.

Goldman added that while GPC has recently acquired over 500 independent stores, future acquisitions may slow as the pool of large independent operators diminishes.

Overall, Goldman Sachs sees AutoZone as better positioned in the current environment, while GPC faces heightened risks due to its broader economic exposure and reliance on an uncertain second-half recovery.

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