Cautious Hold Rating for ARKO Corp Amid Growth Strategy Uncertainties and Stabilizing Trends

ARKO Corp (ARKO – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst on May 9. Analyst Kelly Bania from BMO Capital reiterated a Hold rating on the stock and has a $5.00 price target.

Kelly Bania has given his Hold rating due to a combination of factors impacting ARKO Corp’s current and future performance. The company’s first-quarter EBITDA aligned with expectations despite adverse weather conditions, indicating a stabilization of trends. However, there are concerns about the long-term visibility and sustainability of ARKO’s growth plans, particularly regarding its dealerization benefits, which may diminish over time.
Additionally, ARKO’s growth strategy includes a remodel pilot with limited historical success, and it may take years before these initiatives significantly influence the company’s performance. The substantial capital expenditure required for these remodels further adds to the uncertainty. While ARKO’s management has reiterated its 2025 guidance, the risks associated with weaker retail fuel volumes and same-store merchandise sales compared to peers contribute to the Hold rating. Despite these challenges, the target price has been slightly raised, reflecting a cautious optimism about stabilizing expectations.

In another report released on May 9, Wells Fargo also maintained a Hold rating on the stock with a $4.50 price target.