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Investing.com - Goldman Sachs has reinstated coverage on Alimentation Couche-Tard Inc (TSE:ATD) (OTC:ANCUF) with a Neutral rating and a price target of C$80.00.
The convenience store operator faces pressure on inside sales growth in the near term due to inflation and macroeconomic headwinds affecting consumer spending, according to Goldman Sachs. The firm noted that U.S. merchandise same-store sales sequentially improved and turned positive at 0.4% for the first time since the first quarter of fiscal 2024 on a quarterly basis.
Goldman Sachs also pointed out that EBITDA growth is likely to remain under pressure in the near term, partly due to U.S. fuel margins that have declined approximately 6% year-to-date compared to 2024. The firm believes structural dynamics in the convenience store industry still favor larger players with scale.
The investment bank expressed doubt about Alimentation Couche-Tard’s ability to achieve its "10 for the Win" strategy of reaching $10 billion in EBITDA by fiscal year 2028 from approximately $6 billion in fiscal year 2023 without significant merger and acquisition activity.
Goldman Sachs cited a "more balanced risk-reward with limited upside near-term" for the company, particularly in an environment where organic growth has become more difficult to achieve.
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