Zacks Downgrades Leading Aftermarket Auto Parts Distributor to a Hold Rating

Car partsA true gearhead would scoff at the idea of buying an aftermarket part for their vehicle, but a market for these products does exist. However, for one of the leading distributors in the industry, the future looks slightly bleaker than usual.

According to Financial Wisdom Works, U.S. Auto Parts Network (NASDAQ:PRTS) had its stocks lowered from a strong-buy rating to a hold on Tuesday morning by investment research firm Zacks.

U.S. Auto Parts Network is a leading online provider of automotive aftermarket parts, including body parts, engine parts, performance parts, and accessories.

Shares for the company were at $2.35 on Tuesday. It currently trades 5,237 shares, with a one-year low of $1.50 and a peak of $3.34.

Investors may be hesitant to invest in the company due to a new trend of original equipment manufacturer (OEM) parts that have become the most popular option for those customizing their vehicles.

Many car owners avoid aftermarket parts as they can potentially void their warranty, but mechanics will sometimes use them in place of original parts to cut costs.

In 21 states and the District of Columbia, a body shop’s repair estimate does not have to indicate whether aftermarket parts will be used.

According to Money Flow Index, the public’s unfavorable opinion of aftermarket parts is also having an effect on other major companies. Shares of Genuine Parts Company (NYSE:GPC) traded with a loss of -0.06% in the last session.

Goldman Sachs, another renowned investment research firm, downgraded their rating of Genuine Parts Company on the heels of their slight decline.

U.S. Auto Parts Network had revenue of $76.5 million for the most recent quarter, which paled in comparison to the consensus estimate of $79.2 million investors pegged for the company a few months ago.

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