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Investing.com - KeyBanc has reduced its price target on Murphy USA (NYSE:MUSA) to $480.00 from $500.00 while maintaining an Overweight rating on the stock. Currently trading at $422.59, InvestingPro analysis suggests the stock is trading above its Fair Value, with two analysts recently revising their earnings estimates downward.
The adjustment comes as KeyBanc lowered its second-quarter earnings per share estimate for Murphy USA to $6.05 from $6.75, citing lower-than-expected fuel margin cents per gallon (CPG). Fuel sales generate approximately 60% of Murphy USA’s gross profit, making the company particularly sensitive to fluctuations in fuel margins. The company’s overall gross profit margin stands at 7.36%, reflecting these challenging conditions. Get deeper insights into Murphy USA’s financial health with a comprehensive Pro Research Report, available exclusively on InvestingPro.
On June 16, Murphy USA issued an operational update for the period from April 1 to May 31, reporting retail fuel margins of 29.6 CPG compared to consensus expectations of 28.9 CPG. However, industry data for the entire second quarter (April to June) indicates fuel margins of 21.6 CPG, with margins weakening throughout the quarter.
KeyBanc noted that while fuel margins historically improved in June compared to May, industry data shows margins of 20.6 CPG in June versus 21.1 CPG in May. The firm attributed this compression to the oil price spike in June related to the Israel-Iran conflict.
Murphy USA reported that its total fuel volumes for the quarter-to-date were up 0.5%, but same-store sales were down 1.1% compared to the same period last year. The company’s stock has seen a -15.59% YTD return, though it maintains strong fundamentals with $17.6 billion in revenue over the last twelve months. Despite the near-term softness, KeyBanc maintains a positive long-term outlook for Murphy USA, expecting the company to gain market share through store growth and improve comparable sales when gasoline prices rise again. InvestingPro subscribers can access additional insights, including 8 more ProTips and detailed financial metrics for comprehensive investment decision-making.
In other recent news, Murphy USA Inc. released preliminary operational results for the period from April 1 to May 31, 2025, reporting second quarter-to-date all-in fuel margins of 31.7 cents per gallon, with retail margins at 29.6 cents. The company noted a 0.5% increase in total fuel volumes compared to the same period last year, despite a 1.1% decrease in same-store sales volumes. Murphy USA’s first-quarter 2025 earnings revealed an earnings per share (EPS) of $2.63, which was below the expected $3.93, and revenue of $4.53 billion, missing the forecast of $4.8 billion. In response to these results, KeyBanc Capital Markets reduced the company’s price target from $550 to $525 but maintained an Overweight rating, citing lower-than-anticipated retail fuel margins and reduced fuel volumes due to various factors. Similarly, Stephens adjusted the price target to $475 from $530 while retaining an Overweight rating, noting challenges such as adverse weather and holiday timing. Raymond (NSE:RYMD) James downgraded the stock from Outperform to Market Perform, expressing concerns about the company’s ability to grow its core EBITDA amid economic pressures. Despite these challenges, Murphy USA reported an expansion in retail fuel margins, although this was offset by weaker product supply and demand margins.
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