On Thursday, Stifel initiated coverage on Valvoline Inc . (NYSE:VVV), assigning the stock a Hold rating and setting a price target of $42.00. Currently trading at $36.28, near its 52-week low of $33.86, InvestingPro analysis suggests the stock is fairly valued. Analyst targets range from $37 to $49, with a consensus recommendation leaning towards Buy.
The firm's analysis of Valvoline, a leading quick lube operator in the United States with a market capitalization of $4.67 billion, comes as the company has shared its financial outlook for fiscal year 2025.
Valvoline anticipates revenue growth between 10-14%, building on its current 12.16% growth rate, with adjusted EBITDA (AEBITDA) increase of 7-12%, and adjusted earnings per share (AEPS) growth of 8-15% on a pro forma basis. InvestingPro data shows the company maintains a GOOD financial health score, with particularly strong profitability metrics.
While Valvoline has withdrawn its long-term sales and same-store sales (SSS) forecasts, it has confirmed its goal to open 250 new service units by fiscal year 2027. Stifel's evaluation of Valvoline's business model recognizes the significant potential for expansion, given that the brand has achieved approximately 57% market penetration and is maintaining a unit growth rate of 8-10%.
In other recent news, Valvoline has been the subject of several analyst revisions following its recent earnings report. The company posted strong fourth-quarter results, with adjusted earnings per share of $0.46 and a 12% increase in revenue to $435.5 million. For the full fiscal year, Valvoline reported sales of $1.62 billion. However, the company's fiscal 2025 guidance resulted in several firms adjusting their stock outlooks.
Mizuho (NYSE:MFG) Securities maintained an Outperform rating on Valvoline, citing confidence in the company's growth-oriented strategy. Meanwhile, Baird also retained an Outperform rating, but reduced the price target to $46.00. Citi lowered its price target for Valvoline to $39.00, while maintaining a neutral stance, following challenges revealed in the company's fourth-quarter earnings report.
RBC Capital reduced its price target from $52.00 to $46.00 due to concerns about the company's long-term growth prospects. Despite these adjustments, Piper Sandler reaffirmed its Overweight rating on Valvoline, with a steady price target of $44.00.
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