Jefferies downgrades Murphy USA stock rating to Hold on slower growth outlook

Jefferies downgraded Murphy USA (MUSA) to Hold from Buy, significantly cutting its price target to $350 from $560, citing a reduced 2024-2028 EBITDA growth forecast from 6-7% to below 5%. This revision stems from softer in-store sales trends and a more cautious growth outlook, despite elevated fuel margins, and follows a more than 14% stock decline over the past week. While MUSA exceeded Q2 2025 EPS, it missed revenue forecasts, leading Jefferies to favor Casey's General for its stronger merchandise momentum and growth prospects.

Analysis

Jefferies has downgraded Murphy USA (MUSA) to Hold from Buy, accompanied by a substantial price target reduction to $350 from $560, reflecting a significant reset of expectations. The primary catalyst for the downgrade is a lowered 2024-2028 EBITDA growth forecast, which has been cut from a 6-7% range to below 5%. This revision is attributed to softer in-store sales trends and a generally more cautious growth outlook, despite the company benefiting from elevated fuel margins. The market has reacted negatively, with MUSA's stock declining over 14% in the past week to trade near its 52-week low. While the company's most recent quarterly report showed an earnings per share beat at $7.36 against a $6.77 forecast, it was overshadowed by a revenue miss of $5.01 billion versus an anticipated $5.13 billion, reinforcing concerns about top-line performance. The negative sentiment is further supported by recent downward earnings estimate revisions from three analysts and Jefferies' stated preference for competitor Casey's General Stores (CASY), which is cited for stronger merchandise momentum and continued store growth.

Key Decisions for Investors

• Given the significant price target reduction and lowered long-term growth outlook, investors should re-evaluate long positions in MUSA as the downgrade suggests limited near-term upside.
• Investors must closely monitor MUSA's upcoming reports for any stabilization or further deterioration in in-store sales trends, as this is the primary driver behind the revised, more cautious growth outlook.
• Consider the relative strength of peers like Casey's General Stores (CASY), which Jefferies highlights for its superior merchandise momentum, suggesting a potential pairs trade or a rotation of capital within the convenience store sector.