Jefferies downgrades Murphy USA on reduced growth outlook, volume concerns

Investing.com -- Jefferies downgraded Murphy USA (NYSE: MUSA) to Hold from Buy, citing weaker fuel volumes, muted in-store trends, and a lowered long-term growth outlook that together diminish upside potential for the shares.

While second-quarter results slightly topped expectations, with adjusted EBITDA of $286 million, the focus shifted to a cut in long-term EBITDA guidance.

Management now expects 2024–2028 EBITDA to reach $1.2 billion, down from a prior forecast of $1.3 billion.

That implies a reduced annual growth rate of below 5%, down from 6–7% previously.

“Growth we thought would be ~6.5% from 2024 to 2028 is now likely ~4.5%,” Jefferies wrote, pointing to ongoing volume pressure and macro uncertainty.

Fuel margins remained strong at 32 cents per gallon, aided by disciplined pricing and supply dynamics.

However, total retail gallons declined 0.2% year-on-year, and same-store volumes fell 3.2%, highlighting weaker customer traffic, a trend Jefferies expects to persist into the second half of the year.

Merchandise sales rose just 1% year-on-year, with flat comps outside tobacco categories and stable 20% margins.

Jefferies flagged limited near-term improvement in non-fuel transactions, which continue to lag as fewer fuel visits translate into weaker in-store performance.

Murphy’s store expansion plan, now at 40 openings for 2025, down from 50, offers long-term potential but is unlikely to offset current volume and cost headwinds, the firm said.

Jefferies said it prefers peer Casey’s, citing stronger merchandise sales, a more diverse product mix, and continued operating leverage.

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