Valvoline: Hold Rating Amid Conservative Growth Prospects and Acquisition Challenges

In a report released today, Simeon Gutman from Morgan Stanley maintained a Hold rating on Valvoline, with a price target of $40.00.

Simeon Gutman has given his Hold rating due to a combination of factors influencing Valvoline’s current and future performance. The revised medium-term guidance appears realistic, reflecting a conservative approach suitable for a maturing business. This includes a 3%-5% comp growth target driven by traffic and ticket growth, which is considered achievable even if the macroeconomic environment remains challenging.
However, the Breeze acquisition is expected to exert pressure on EBITDA margins in the near term, contributing to a temporary setback. Despite this, the underlying business fundamentals, such as traffic and ticket growth, are intact and should support a return to productive growth over the medium term. The stock’s current trading multiple suggests potential for expansion, but consistent execution is crucial, especially following the recent acquisition. Therefore, while the long-term outlook is positive, the stock remains in a ‘show-me’ phase, justifying the Hold rating.

Gutman covers the Consumer Cyclical sector, focusing on stocks such as AutoZone, Dick’s Sporting Goods, and Best Buy Co. According to TipRanks, Gutman has an average return of 3.3% and a 57.86% success rate on recommended stocks.

In another report released yesterday, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $34.00 price target.