Goldman Sachs upgraded MUSA from Sell to Neutral, citing a favorable setup for fuel margin-driven upside to risk-reward

Overview

This report covers Murphy USA Inc., with the core conclusion that the macro environment has shifted from past pressure to a more favorable setup for fuel margins. Goldman Sachs believes that after crude oil cooled from elevated levels, stronger industry fuel margins and MUSA’s low-cost pricing capability could support healthier EBITDA delivery in the near to medium term, so the rating was upgraded from Sell to Neutral. At the same time, the report stresses that MUSA’s earnings are still highly dependent on fuel-related drivers, and growth visibility remains limited, so the firm keeps a neutral stance rather than turning constructive.

Core views

Goldman Sachs’ key points include: first, oil prices usually falling are often accompanied by rising retail fuel margins; recent OPIS data showed industry fuel margins in June up 92% from May and up 37% from April; second, as a low-cost fuel retailer, MUSA can gain incremental share and volume through lower pump pricing when retail fuel prices decline and stabilize; third, the Fuel Supply business has structural advantages and can contribute roughly 2-3 CPG in a normal environment, with manageable Q1 promotional impact of 2.4 CPG; fourth, valuation is relatively reasonable, with forward EV/EBITDA at 11.3x, a 22% discount to ATD and CASY, and tighter than both 3-year and 5-year average discounts.

Analysis framework

The report evaluates MUSA’s risk-reward through a combination of macro oil-shock comparisons, the link between fuel margins and oil prices, segmentation of fuel-supply business, EBITDA upgrade expectations, same-store fuel gallon and merchandise assumptions, HundredX consumer sentiment data, and EV/EBITDA and P/E valuation multiples. It also compares the current post-Iran conflict oil-price environment with the oil-price decline cycle after the early Russia-Ukraine conflict to judge whether fuel margins can remain at elevated levels.

Methodology notes

• Valuation methodsEqual-weighted EV/EBITDA and P/E valuation

  The target price is derived by equally weighting a 10.6x EV/EBITDA and 17.0x P/E multiple on Q5-Q8 estimates.

  Goldman Sachs raised the target multiples to reflect stronger near-to-medium-term fuel margin delivery; the target price was increased from $380 to $550.

• Industry ComparisonOil-cycle analogy from the Russia-Ukraine conflict

  Uses the historical path of oil prices rising then falling after the Russia-Ukraine conflict and improving fuel margins as an analogy to the current post-Iran conflict environment.

  The report argues that current crude oil has moved down from high levels to around $70 per barrel, similar to the decline phase after the previous shock, and may again become a tailwind for convenience-store fuel margins.

• Consumer DataHundredX Insights

  Uses NPS and NCI to measure customer willingness to recommend and purchase intent.

  HundredX data covers 1.36 million feedback records from 444K participants since August 2021, and the report states that MUSA’s recent NPS is above comparable convenience-store peers.

• Risk ScoringGS Factor Profile and M&A Rank

  GS Factor Profile compares stocks across growth, returns on capital, valuation multiples, and overall composites; M&A Rank assesses takeover likelihood.

  MUSA’s M&A Rank is 3, indicating a lower probability of becoming an acquisition target, and is typically not included in target-price assumptions.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• MUSA.US

  Core coverage target

  Strengths

  Low-cost fuel-retail positioning, Fuel Supply capabilities, supportive fuel margins, potential share gains, and upward FY26 earnings revisions.

  Weaknesses

  Earnings are highly fuel-dependent, with fuel accounting for 77% of revenue and 54% of profit; the merchandise side—especially nicotine categories—may be pressured by promotional competition.

  Comparison

  Forward EV/EBITDA is 22% discounted to ATD and CASY, tighter than the 3-year and 5-year average discounts; MUSA remains discounted in EV/EBITDA and P/E versus C-store/Food/Dollar peers.

  Risks

  If fuel margins fall sharply, consumer conditions remain weak for longer, or nicotine/tobacco share declines (especially in nicotine pouches and stronger promotional pressure), the earnings-upgrade thesis could be impaired.

• ATD and CASY

  Valuation and industry comparison references

  Strengths

  Used as convenience-store peers for assessing MUSA’s relative valuation discount.

  Weaknesses

  The report does not delve into their fundamentals and uses them only as relative valuation references.

  Comparison

  MUSA’s forward EV/EBITDA is 22% discounted relative to ATD and CASY, narrower than their 3-year average of -13% and 5-year average of -9%.

  Risks

  If peer valuations are marked down or if the industry-wide fuel margin supportive environment weakens, MUSA’s relative discount signal may no longer represent a margin of safety.

Key data

• Rating changeUpgraded from Sell to NeutralThe rating has been Neutral as of 2026-07-06.
• 12-month target price$550.00Previous target was $380.00, current price is $560.75.
• Implied upside/downside-1.9%The report cover page shows Downside of 1.9%.
• Q2 EPS estimate$9.30Raised by $0.86 from prior; FactSet consensus is $9.48.
• FY26 EPS estimate$32.69Raised by $3.93 from prior; FactSet consensus is $32.11.
• FY26 EBITDA estimate$1.191B-$1.192BRaised from $1.096B; the report says yoy growth is about 16.9%.
• FY26 company-wide fuel margin estimate34.8 CPGPreviously 33.0 CPG; consensus expectation is 32.6 CPG.
• FY26 same-store fuel gallon growth estimate-0.2%Previously -1.5%; management’s current guidance is -3% to -1%.
• Market value and enterprise valueMarket value $10.0bn; enterprise value $11.8bnDisplayed in the Key Data section on the report cover page.
• Current valuationFY27E EV/EBITDA 11.3x; FY27E P/E 18.3xEach is at a premium to the company’s historical average, but still at a discount versus convenience-store, food, and discount retail peers.

Impact & implications

The investment implication for MUSA has shifted from negative to balanced: improving fuel margins, low-cost positioning, and FY26 upward forecast revisions provide upside support, but the current share price already appears to discount the improved near-to-medium-term thesis. For investors, MUSA is more a margin-recovery/earnings-revision story driven by lower oil prices and fuel margins than a stock with clearly expanding valuation upside.

Risks

• Fuel margins decline materially.
• A persistently weak consumer environment suppresses non-essential merchandise sales.
• Loss of tobacco and nicotine category share, especially in nicotine pouch new launches and intensified promotional competition.
• High fuel exposure at MUSA means oil prices, retail fuel prices, and industry volatility can amplify earnings uncertainty.
• Shareholder returns, capital allocation, or store execution coming in below expectations.

What to watch

• At the Q2 report release, whether FY26 guidance is raised, especially same-store fuel gallons, company-wide fuel margins, net income, and adjusted EBITDA.
• Whether crude oil continues to fall and retail fuel margins can stay at elevated levels.
• Whether MUSA can gain fuel sales share through lower pump prices in a lower-oil-price environment.
• Whether promotional competition in nicotine pouches and tobacco continues to pressure 3Q26 gross margin.
• Whether HundredX NPS and purchase-intent data continue to show MUSA outperforming convenience-store peers.
• Whether FY27E EV/EBITDA and P/E still offer attractive relative positioning versus history and peers.