O’Reilly Automotive Faces Insider Sales and New Legal Challenge

Recent regulatory filings reveal notable share disposals by a major institutional investor and company insiders at auto parts retailer O'Reilly Automotive. Concurrently, a new class-action lawsuit has been filed against the company, adding a layer of legal scrutiny.

AEGON Asset Management UK Plc disclosed a reduction in its O'Reilly Automotive holdings during the third quarter of 2025. The firm sold 41,802 shares, a 19.7% decrease in its position. Following this transaction, AEGON retains 170,070 shares valued at approximately $18.33 million.

Separately, insider transactions over the past 90 days show sales totaling roughly 8,980 shares, equivalent to about $882,335. Notable among these were disposals by SVP Philip M. Hopper, who sold 3,500 shares at an average price of $101.25 (a 42.21% reduction in his direct holdings), and Director John Raymond Murphy, who sold 3,125 shares at $92.60 (a 27.78% reduction). Insiders collectively own approximately 1.01% of the company's shares, while institutional investors control an estimated 85%.

The sales activity, while perceptible, does not necessarily signal fundamental weakness given the overwhelming institutional ownership and the still-minimal insider stake.

Class-Action Lawsuit Details

On January 15, a class-action complaint was brought forward by a former employee. The lawsuit alleges the improper use of 401(k) forfeitures. Specifically, it claims that more than $24.1 million in plan forfeitures from 2019 to 2024 were used to offset employer matching contributions, which the plaintiff contends is unlawful.

Should investors sell immediately? Or is it worth buying O'Reilly Automotive?

O'Reilly has stated that its 401(k) plan is administered in compliance with legal requirements and the plan's own terms. This legal action introduces a potential financial and reputational consideration, though its ultimate impact awaits further judicial proceedings.

Financial Performance and Market Outlook

Despite these developments, analyst sentiment remains largely favorable. The consensus rating is "Buy," with an average price target of $111.80. Several firms, including UBS, Morgan Stanley, and Raymond James, have recently raised their price targets or upgraded their ratings. O'Reilly's stock closed at $99.24 on January 23.

Key Financial and Operational Data:
* 52-Week Trading Range: $82.90 – $108.71
* Moving Averages: 50-day average of $95.42; 200-day average of $98.83
* Q3 2025 Results: Revenue of $4.71 billion (surpassing expectations of $4.69 billion); Earnings Per Share (EPS) of $0.85.
* Growth Drivers: Revenue increased by $341 million; comparable store sales grew 5.6%; operating profit rose 9%; gross margin stood at 51.9%.
* Expansion Strategy: Plans for up to 235 new store openings in 2026, including an announced entry into the Canadian market in October 2025.

The company is scheduled to release its fourth-quarter and full-year 2025 results on February 4, with a conference call to follow on February 5. These events will be closely watched for any management commentary on the recent lawsuit or whether the share sales reflect broader operational concerns.