On Tuesday, Mizuho (NYSE:MFG) Securities maintained its positive stance on shares of Valvoline Inc . (NYSE:NYSE:VVV), reiterating an Outperform rating with a $46.00 price target, representing about 17% upside from the current price of $39.44. According to InvestingPro data, analysts' targets for Valvoline range from $37 to $49, with a consensus recommendation leaning strongly bullish at 1.85.
The affirmation follows an investor event that included discussions with Valvoline's top management, including CEO and President Lori Flees and CFO Mary Meixelsperger. The company, known for its automotive lubricants and services, did not disclose any intra-quarter trends during the event.
The investment firm expressed a more constructive view on Valvoline's stock, citing confidence in the company's growth-oriented strategy. This confidence appears well-founded, as InvestingPro data shows the company achieved impressive revenue growth of 12.16% over the last twelve months, with a healthy gross profit margin of 38.22%.
Valvoline's leadership team, which also featured Treasurer Jordan Denny and Senior Director of Finance Elizabeth Clevinger, indicated openness to more re-franchising transactions, although they are not actively seeking them due to unexpectedly high interest in recent months.
Valvoline's existing franchise partnerships are expected to support the planned increase in the number of service centers, with the aim of opening more than 250 new units annually over the next few years. This expansion is part of Valvoline's broader growth strategy.
Mizuho also noted that Valvoline's anticipated Selling, General and Administrative (SG&A) investments for Fiscal Year 2025 appear to be a recalibration of expenses, with potential for improved leverage in subsequent years.
The firm views the current risk-reward balance for Valvoline's shares favorably and suggests that a bullish scenario could see the stock price exceed $60. The Outperform rating indicates that Valvoline is a preferred small to mid-cap (SMID) investment play according to Mizuho Securities.
In other recent news, Valvoline reported robust fourth-quarter earnings with adjusted earnings per share of $0.46 and a 12% increase in revenue to $435.5 million, surpassing estimates. Despite this, the company's FY25E guidance resulted in several firms adjusting their stock outlooks. Piper Sandler reaffirmed its Overweight rating with a steady price target of $44.00, while Baird maintained an Outperform rating with a reduced price target of $46.00.
Citi lowered its price target to $39.00, maintaining a Neutral rating, and RBC Capital reduced its price target from $52.00 to $46.00, retaining an Outperform rating. Despite these adjustments, Valvoline plans to open 160 to 185 new stores in the upcoming fiscal year, following the addition of 158 new stores in fiscal 2024. These are among the recent developments for Valvoline.
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