Piper Sandler reiterates Overweight rating on Mister Car Wash stock

Investing.com - Piper Sandler has reiterated an Overweight rating and $11.00 price target on Mister Car Wash (NYSE:MCW) Inc. (NASDAQ:MCW), highlighting it as a "buy now" opportunity for the $2.08 billion market cap company. According to InvestingPro data, the company has maintained profitability over the last twelve months with revenue growing at 8.18%.

The research firm points to a significant disconnect between improving company fundamentals and the declining stock price, which has underperformed by falling 19% since mid-May while the S&P 500 gained 4.8% during the same period.

Piper Sandler’s checks with privately-held car wash operators indicate healthy industry trends over the last three quarters, including through Q2, driven by improved demand and fewer new unit openings in the sector.

The firm identifies notable structural changes to the industry with fewer location openings, while MCW’s increased advertising efforts could potentially maintain strong fundamentals for several years.

Valuation for Mister Car Wash currently sits at an all-time low on both P/E and EV/EBITDA bases, with Piper Sandler suggesting the possibility of a beat-and-raise pattern for earnings in the second half of the year.

In other recent news, Mister Car Wash Inc. reported a strong performance in the first quarter of 2025, with earnings per share (EPS) of $0.11, beating the forecast of $0.10. The company also exceeded revenue expectations, recording $261.7 million compared to the anticipated $257.84 million. The company achieved a 9% increase in revenue and a 14% growth in adjusted EBITDA, which rose to $86 million. Despite these positive results, Goldman Sachs downgraded Mister Car Wash’s stock to a Sell rating, setting a price target of $6.25. Analysts from Goldman Sachs expressed concerns about the competitive market environment and potential challenges in the latter half of 2025, including the impact of planned price increases on customer retention. Mister Car Wash also announced a strategic plan to open 30-35 new stores in 2025, with a significant portion of these openings scheduled for the second half of the year. The company remains optimistic about its long-term growth potential despite acknowledging potential risks such as market saturation and consumer spending volatility.

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