Cleveland Research downgraded auto parts retailers O'Reilly Automotive (ORLY) and AutoZone (AZO) to Neutral from Buy today, citing weak demand from the companies' "do-it-yourself" customers.

DIY WEAKNESS SEEN: The comparable sales of O'Reilly and AutoZone are being pressured mainly by weak demand from the "core DIY customer," reported Cleveland Research analyst Daryl Boehringer. The weak comp sales trends seen in February could be explained by late tax refunds and strange weather trends, but "continued softness" in March has made the analyst less confident in the sector's 2017 outlook, he wrote. Milder than normal weather in February has constrained the sector's growth, while improved product offerings at Wal-Mart (WMT) and increased competition from Amazon (AMZN) are among the "secondary" factors lowering comp sales, the analyst stated. Additionally, low sales of new autos during the Great Recession may be reducing the number of vehicles that need to be repaired now, Boehringer warned.

ESTIMATES CUT: The analyst lowered his Q1 comp sales growth outlook for O'Reilly and he reduced his Q1 EPS estimate for the parts retailer below the consensus outlook. Boehringer cut his Q3 comp sales growth estimate for AutoZone and lowered his Q3 EPS estimate for the company to below the consensus outlook as well.

WHAT'S NOTABLE: U.S. automakers have posted their March results this morning and the sales figures have generally come in below the forecasts of industry publication Edmunds. GM's (GM) sales increased 1.6% year-over-year in March, versus Edmunds' forecast of a 9.6% gain, Toyota's (TM) sales fell 2.1% versus the forecast for a 1.2% increase, and Honda's (HMC) sales inched down 0.7% versus the forecast of a 2.8% increase. Ford's (F) sales fell 7.2% year-over-year, versus the consensus outlook for an 8.25% decline.

PRICE ACTION: In morning trading, O'Reilly fell 5.2% to $255.85 and AutoZone gave back 3.3% to $699.39. Meanwhile, Ford shares slid 3%, GM declined 4% and Fiat Chrysler Automobiles (FCAU) dropped about 5%.