The convenience store business is splitting into winners and losers, and BofA Securities analyst Lisa K. Lewandowski just drew a pretty clear line between them. She initiated coverage on Casey's General Stores, Inc. (CASY) and Murphy USA Inc. (MUSA) with ratings that tell very different stories about where the sector is headed.
Casey's: The Pizza Chain That Also Sells Gas
Lewandowski slapped a Buy rating on Casey's with a $700 price target, valuing the company at a 2027 EV-to-EBITDA multiple of 15.9 times. That's above Casey's one-year average and well above most convenience store competitors, but the analyst thinks the premium is justified.
Here's why: Casey's isn't really acting like a gas station anymore. Sure, fuel accounts for roughly 61% of fiscal 2025 revenue, but here's the kicker—about 70% of inside transactions don't include fuel purchases. People are stopping at Casey's for the food, not just to fill up the tank.
The company has become the third-largest convenience store operator in the U.S., and it also ranks among the biggest pizza chains and liquor license holders nationwide. That's a different business model than the traditional fuel-and-cigarettes playbook.
Lewandowski expects EBITDA growth to stay in the 8% to 10% range over the medium term, driven by Casey's higher-margin foodservice mix. The analyst highlighted the company's rural footprint as a competitive edge in underserved food markets. And there's more upside coming: foodservice margins should expand as CEFCO locations convert to Casey's formats starting in 2026.
The company's current three-year strategic plan is nearly wrapped up, which means management has been executing on its vision with consistency.
Murphy USA: Stuck in the Old Model
Meanwhile, Lewandowski reinstated coverage of Murphy USA with an Underperform rating and a $405 price target. She's valuing the company using a 2027 EV-to-EBITDA multiple of just 8.6 times, below its long-term average.
The problem? Murphy USA is heavily exposed to fuel and nicotine sales at exactly the wrong time. Low gas prices and muted fuel volatility limit earnings leverage, according to Lewandowski. Cigarette volumes are declining. The foodservice business is relatively small. And all of this hits hardest when lower-income consumers are already under pressure.
Murphy USA does have some things going for it. The analyst acknowledged the company's lean operations, value-focused pricing strategy, Walmart-adjacent locations, and disciplined store expansion. Management's commitment to shareholder returns and the current valuation offer some long-term support.
But the risks are real. Downside scenarios include oil price shocks, economic stress, and potential disruptions to the Walmart relationship. Upside would require rising fuel prices, higher volatility, or improving disposable income trends—basically, a reversal of current conditions.