Tomorrow’s Trade Idea, Today
PARTS AND PARCELS
A Constructive Setup
Genuine Parts Company $GPC ( ▲ 2.14% ) just earned a double upgrade from Raymond James $RJF ( ▲ 1.17% ).
The firm moved the auto parts distributor to Strong Buy from Market Perform and set a $145 price target.
Analyst Sam Darkatsh argues recent underperformance has created an attractive risk-reward profile, with shares trading well below implied fair value.
Separation Story
The crux of the call centers on GPC’s planned split of its automotive business, NAPA, and its industrial arm, Motion Industries.
Darkatsh notes that the two divisions already operate mostly independently. The separation, targeted for completion in the first quarter of 2027, should help unlock value.
He describes the setup as constructively asymmetric, based on a conservative sum-of-the-parts analysis. Investor days for both businesses in the second half of 2026 could also help close the valuation gap.
Near-Term Noise, Long-Term Value
Shares are down in the wake of the fourth-quarter print, despite the separation announcement.
Darkatsh acknowledges near-term sentiment could remain pressured by a soft automotive end market and potential rotation by dividend-focused investors.
However, he points to improving industrial data and believes investors will better appreciate GPC’s value as the separation date approaches.
For Raymond James, the math is straightforward. When the parts come apart, the valuation could finally come together.
