NEW YORK (AP) -- A Goldman Sachs analyst started coverage of Casey's General Stores with a "Neutral" rating on Wednesday, saying the stock trades at a premium to other companies he covers and to its historical average.
Analyst Stephen Grambling said in a client note that Casey is among the best in the convenience store sector thanks in part to its strong prepared food offering and centralized self-distribution.
The company runs its stores in low-population markets with limited competition, he added. This, combined with its prepared foods and centralized self-distribution, has allowed Casey's to produce consistent earnings per share and cash flow growth relative to its peers.
The Ankeny, Iowa chain operates more than 1,730 convenience stores in 14 Midwestern states. According to Grambling, "Over the long run Casey's plans to evolve from operating a gasoline station that happens to sell pizza to a pizza restaurant that happens to have gas."
Grambling gave the company a $62 price target, implying he expects shares to rise 15 percent in the next year.
Shares of Casey's General Stores Inc. fell 74 cents to $53.26 in midday trading, in line with the broader market downturn. For the year to date, the stock is up less than 1 percent.