Home / Business and Economy / Valvoline Stock Surge: Oil Prices Fueling Gains?
Valvoline Stock Surge: Oil Prices Fueling Gains?
23 Mar
Summary
- Stifel upgraded Valvoline stock to buy with a $42 price target.
- Less than 20% of Valvoline's operating costs are oil-derived lubricants.
- Valvoline shares have risen 13% year-to-date, outperforming the S&P 500.
Valvoline's stock has received a significant boost from Stifel, which upgraded the automotive maintenance firm to a buy rating and raised its price target to $42. This optimism stems from an analysis suggesting that potential increases in oil prices, driven by geopolitical events, will have a minimal impact on Valvoline's profitability in the near term.
Stifel analysts highlighted that less than 20% of Valvoline's operating expenses are linked to oil-derived lubricants. Furthermore, the cost of base oil, a key component of motor oil, is less volatile than crude oil. The company also benefits from a franchised network with floating pricing and increasing revenue from waste-oil recovery, which can offset potential cost increases.
These positive factors have contributed to Valvoline shares rising nearly 13% year-to-date, a notable performance compared to the S&P 500's decline during the same period. The consensus among Wall Street analysts generally supports this positive outlook, with a majority recommending a buy or strong buy.
