Casey’s General Stores’ Price Target Reduced by RBC to $116 From $118, Sector Perform Kept

Casey’s General Stores (CASY) received a price-target reduction Tuesday from RBC Capital Markets as the firm looks ahead to the convenience-stores operator’s fiscal Q1 report due next Tuesday.

The new price target is $116 per share, down from $118 but still above the stock’s Monday closing price of $105.28. RBC kept its investment rating on the stock at sector perform.

RBC’s estimates for Casey’s General Stores’ fiscal Q1 are slightly below consensus expectations. The firm said its forecasts reflect expectations of sustained operating headwinds in fiscal 2018.

“In our view, CASY’s challenging [fiscal 2017] and recent traffic trends are the product of three consecutive years of subpar agriculture economics driving a gradual shift in consumer buying patterns, in particular discretionary purchases inside the store,” the firm said. It added: “Given expectations for very modest improvements in farm income in 2018, we anticipate ongoing pressures through [fiscal 2018] and possibly beyond.”

The firm also noted the tone at Casey’s General Stores’ recent investor event “was constructive, acknowledging challenges while highlighting a more tactical strategic stance to grow the business against the backdrop of moderating traffic, tepid consumer-spending growth and [operating-expense] headwinds.”

RBC added: “While near-term, consumer related headwinds are likely to persist, we remain constructive on the long view, with profitable growth driven by new units, strategic initiatives, [operating-expense] control and an appetite” for mergers and acquisitions.

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