Investors are closely watching the convenience retail sector as new research highlights shifting demand and competitive pressures.
BofA Securities analyst Lisa K. Lewandowski initiated coverage on Murphy USA Inc. (NYSE:MUSA) and Casey’s General Stores, Inc. (NASDAQ:CASY).
Casey’s General Stores
Analyst Lewandowski initiated coverage of Casey’s General Stores with a Buy rating and a $700 price objective.
Lewandowski based the valuation on a 2027 EV-to-EBITDA multiple of 15.9 times. That multiple sits slightly above Casey’s one-year average and well above most convenience store peers.
The analyst justified the premium by pointing to Casey’s higher-margin foodservice mix and steady EBITDA growth. Lewandowski expects “consistent EBITDA growth” to remain in the 8% to 10% range over the medium term.
She said Casey’s continues to gain traction in prepared foods and outperform regionally in fuel sales.
Fuel accounted for about 61% of fiscal 2025 revenue, according to the analyst’s estimates. However, Lewandowski noted that roughly 70% of inside transactions exclude fuel purchases. That dynamic suggests customers increasingly view Casey’s stores as food destinations rather than fuel stops.
Lewandowski highlighted Casey’s scale as the third-largest U.S. convenience store operator. She also noted the company ranks among the largest pizza chains and liquor license holders nationwide.
The analyst described Casey’s rural footprint as a competitive advantage in underserved food markets. Lewandowski expects foodservice margins to expand as CEFCO locations convert to Casey’s formats starting in 2026.
She said the company’s current three-year strategic plan is nearly complete.
Murphy
Lewandowski also reinstated coverage of Murphy USA with an Underperform rating and a $405 price target.
She valued Murphy USA using a 2027 EV-to-EBITDA multiple of 8.6 times. That multiple sits below the company’s long-term average, reflecting limited near-term upside.
Lewandowski cited Murphy USA’s heavy exposure to fuel and nicotine sales as a constraint. Low gas prices and muted fuel volatility further limit earnings leverage, according to the analyst. She also pointed to declining cigarette volumes and a relatively small foodservice business.
Lewandowski said these factors weigh on performance amid ongoing pressure on lower-income consumers. Positive attributes include Murphy USA’s lean operations and value-focused pricing strategy. The analyst also acknowledged the company’s Walmart-adjacent locations and disciplined store expansion.
Commitment to shareholder returns and valuation appeal provides some long-term support, she said.
Downside risks include oil price shocks, economic stress, and disruptions to the Walmart relationship. Upside risks include rising fuel prices, higher volatility, or improving disposable income trends.
Price Action: CASY shares are trading higher by 2.84% to $603.01 at last check Friday, while MUSA shares are trading lower by 1.11% to $424.19.
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