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Key Takeaways
- Casey’s Basic Shops could possibly be well-positioned to broaden and comparatively insulated from tariffs and an financial downturn, KeyBanc analysts stated in a latest analysis be aware.
- KeyBanc initiated protection of Casey’s Basic Shops with an «obese» ranking and $500 worth goal Thursday, suggesting 9% upside from Friday’s shut.
- Shares added over 4% Friday amid broader market positive aspects and have risen practically 50% over the previous yr.
Casey’s Basic Shops (CASY) has gained one other bull.
KeyBanc Capital Markets on Thursday initiated protection of the Iowa-based fuel station and comfort retailer chain at «obese» with a $500 worth goal. It’s the highest of the 5 present worth targets tracked by Seen Alpha, which has a consensus of $468.50.
Casey’s Basic Shops shares added over 4% Friday to shut at $457.25 amid broader market gains. They’ve risen practically 50% over the previous yr.
KeyBanc analysts wrote that Casey’s could scoop up extra rivals—it has acquired practically 470 shops previously 5 years—and bolster their sales by introducing pizza and ready meals. «Wanting ahead, we see balanced progress pushed from natural retailer openings, small acquisitions … and (at a retailer degree) from its investments in its meals innovation pipeline,» the analysts stated.
Comfort Retailer Sector ‘Has Little Direct Tariff Threat,’ KeyBanc Says
The comfort retailer trade, which KeyBanc estimates generated 2024 gross sales of $825 billion, «has little direct tariff danger,» it stated. However the discipline can be fragmented and ripe for consolidation, with KeyBanc estimating 75% of chains could exit of enterprise or be acquired by rivals.
A lot of the gross sales progress within the fuel station sector has come in recent times from snacks, drinks, tobacco and objects bought inside comfort shops, KeyBanc stated, including that that is Casey’s energy. The corporate is the fifth-largest pizza chain within the U.S. and rising, analysts stated.
«Regardless of being a comfort retailer and working in rural and lower-population markets, Casey’s ready meals enterprise produces spectacular quantity, with (common unit quantity) higher than Subway,» the be aware stated, including: «Its meals innovation pipeline can be gaining sophistication and may drive comp progress.»
With pizza costs $1 or $2 under rivals, Casey’s could attract clients searching for worth, the analysts stated. CEO Darren Rebelez stated Casey’s wants to make inroads with folks seeking to save and has seen not too long ago seen clients decide baked items over high-priced sweet.