Valvoline Stock Upgraded to Buy Amid Rising Oil Prices
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Source: CNBC
- Rating Upgrade: Stifel upgraded Valvoline's stock from hold to buy, raising the price target from $40 to $42, indicating a potential 28% upside from Friday's close, reflecting market optimism about its future performance.
- Oil Price Impact: Oil prices have surged approximately 40% this month due to the U.S.-Iran war; however, with less than 20% of Valvoline's operating costs linked to oil-derived lubricants, analysts believe the impact on profits is overstated.
- Cost Structure Analysis: According to Stifel, finished lubricants, including motor oil, account for only 12% to 14% of Valvoline's total operating costs, and these costs are unlikely to rise significantly in the coming weeks due to the lower volatility of base oil compared to crude oil.
- Revenue Hedge Mechanism: Valvoline benefits from two critical structural offsets: a direct revenue hedge through floating pricing for its 50% franchised network and rising waste-oil recovery revenue, which typically tracks crude prices, providing good financial visibility for the company.
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Analyst Views on VVV
Wall Street analysts forecast VVV stock price to rise
13 Analyst Rating
9 Buy
4 Hold
0 Sell
Moderate Buy
Current: 34.380
Low
30.00
Averages
39.15
High
44.00
Current: 34.380
Low
30.00
Averages
39.15
High
44.00
About VVV
Valvoline Inc. provides automotive preventive maintenance services, convenient and trusted services in its retail stores throughout the United States and Canada. The Company's service includes 15-minute stay-in-your-car oil changes; battery, bulb and wiper replacements; tire rotations, and other manufacturer-recommended maintenance services. It has 2,300 franchised and Company-operated service centers across the United States and Canada. The vehicle maintenance services offered by the Company include air filter replacement, battery replacement, differential fluid, fuel system cleaning, headlight and taillight replacement, radiator service, tire rotation, transmission service, air conditioning, and wiper blade replacement. The Company’s services are offered to a range of vehicle types, serving both consumers and commercial customers, such as hybrid electric vehicles, battery electric vehicles, medium duty and passenger car motor oil light duty.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Oil Price Impact: Oil prices have surged approximately 40% this month due to the U.S.-Iran war; however, with less than 20% of Valvoline's operating costs linked to oil-derived lubricants, analysts believe the impact on profits is overstated.
- Cost Structure Analysis: According to Stifel, finished lubricants, including motor oil, account for only 12% to 14% of Valvoline's total operating costs, and these costs are unlikely to rise significantly in the coming weeks due to the lower volatility of base oil compared to crude oil.
- Revenue Hedge Mechanism: Valvoline benefits from two critical structural offsets: a direct revenue hedge through floating pricing for its 50% franchised network and rising waste-oil recovery revenue, which typically tracks crude prices, providing good financial visibility for the company.
See More
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- Oil Price Plunge Fuels Market Surge: US stocks rallied sharply with the S&P 500 up 1.15%, the Dow Jones up 1.38%, and the Nasdaq 100 up 1.22%, as President Trump postponed strikes on Iranian energy infrastructure, alleviating geopolitical tensions and boosting investor sentiment.
- Bond Yields Decline: The 10-year Treasury yield fell from an 8-month high of 4.44% to 4.33%, providing support for equities as concerns over inflation pressures eased, which could influence future monetary policy decisions by the Federal Reserve.
- Mixed International Market Reactions: While US markets surged, European markets showed mixed results, with the Eurozone consumer confidence index dropping to a nearly 2.5-year low of -16.3, indicating economic uncertainty that may affect future investment strategies.
- Strong Performance from Tech Stocks: The so-called
See More
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- Airline Stocks Rally: Following President Trump's announcement that the U.S. would refrain from striking key energy infrastructure in Iran, Delta Air Lines, United Airlines, Southwest Airlines, and American Airlines saw their stock prices surge approximately 4%, indicating market optimism for a recovery in the airline sector.
- Travel-Related Stocks Rise: Optimism surrounding a resolution to the Iran conflict boosted online travel booking site Booking Holdings by nearly 2%, short-term rental platform Airbnb by almost 3%, and hotel chains Hyatt, Marriott, and Hilton by around 3%, reflecting expectations for a rebound in travel demand.
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See More
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- Market Surge: The S&P 500 rose by 2.10%, the Dow Jones by 2.30%, and the Nasdaq 100 by 2.19%, indicating a strong market response to the sharp drop in oil prices, which is expected to enhance corporate profitability.
- Oil Price Drop: Crude oil prices plummeted over 10% after President Trump postponed strikes on Iranian energy infrastructure, which will lower fuel costs for airlines and cruise lines, thereby boosting their profit margins.
- Bond Yields Decline: The 10-year Treasury yield fell from an 8-month high of 4.44% to 4.34%, reflecting reduced market concerns about inflationary pressures, which supports further stock market gains.
- International Tensions: Productive talks between Trump and Iran may lead to an end to the Middle East conflict, with the International Energy Agency reporting severe damage to over 40 energy sites across nine countries, potentially causing long-term disruptions to global supply chains.
See More
Stock Market Rises as Oil Prices Plunge
- Oil Price Plunge Impacts Market: Following President Trump's announcement to postpone strikes on Iranian energy infrastructure, crude oil prices fell over 7%, directly contributing to a 1.73% rise in the S&P 500 and a 1.97% increase in the Dow Jones, reflecting market optimism over easing geopolitical risks.
- Bond Yields Decline: The 10-year Treasury yield fell from an 8-month high of 4.44% to 4.27% on news of a potential end to the Iran war, indicating a reduction in investor concerns about inflationary pressures that could influence Federal Reserve policy decisions.
- Global Supply Chain Risks: The International Energy Agency reported that over 40 energy sites across nine Middle Eastern countries have been severely damaged due to the Iran war, potentially prolonging disruptions to global supply chains and affecting international market stability post-conflict.
- Strong Performance in Tech Stocks: Amidst the overall market rise, technology stocks like Tesla, Nvidia, and Amazon saw gains of over 2%, indicating increased investor confidence in the tech sector, which may lay the groundwork for future market growth.
See More
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- Apple Rating Reiterated: Bank of America reiterates its buy rating on Apple, lowering its price target from $325 to $320, yet remains optimistic about the foldable iPhone in 2026, which is expected to drive future sales growth.
- Cemex Upgraded to Overweight: Morgan Stanley upgrades Cemex from equal weight to overweight, highlighting the company's leading position in margin protection and a robust balance sheet that supports future growth prospects.
- Nvidia Maintains Outperform Rating: Bernstein reiterates its outperform rating on Nvidia, asserting that the datacenter opportunity is enormous and still in its early stages, with significant upside potential ahead.
- Cheniere Energy Upgraded to Overweight: Morgan Stanley upgrades Cheniere Energy, citing its largely contracted portfolio that provides stable cash flows and better margins and growth prospects in the LNG market.
See More
Valvoline Stock Upgraded to Buy Amid Rising Oil Prices
- Rating Upgrade: Stifel upgraded Valvoline's stock from hold to buy, raising the price target from $40 to $42, indicating a potential 28% upside from Friday's close, reflecting market optimism about its future performance.
- Oil Price Impact: Oil prices have surged approximately 40% this month due to the U.S.-Iran war; however, with less than 20% of Valvoline's operating costs linked to oil-derived lubricants, analysts believe the impact on profits is overstated.
- Cost Structure Analysis: According to Stifel, finished lubricants, including motor oil, account for only 12% to 14% of Valvoline's total operating costs, and these costs are unlikely to rise significantly in the coming weeks due to the lower volatility of base oil compared to crude oil.
- Revenue Hedge Mechanism: Valvoline benefits from two critical structural offsets: a direct revenue hedge through floating pricing for its 50% franchised network and rising waste-oil recovery revenue, which typically tracks crude prices, providing good financial visibility for the company.
See More
