The analyst's raised price target is based on the new FY25 EPS estimate of $13.00, as the analyst expects the management to continue to execute its unique growth model.

The stock currently trades at 22x the FY24 estimate of $12.15 and 21x the new $13.00 estimate for FY25. 

Lawrence writes that the model consists of solid unit growth, above-average fuel margins, and improvements inside the store under a reduced cost structure.

Management has indicated the desire to grow by 150 units in 2024, which includes the 63-unit EG Group acquisition, which should close by the end of 2023, the analyst adds.

The longer-term goal is to add 350 locations over the next three years.

According to Lawrence, the company's operating expenses are assumed to increase by 6% during FY25 as management has done a solid job of controlling expenses, reducing turnover, and eliminating labor hours across the business. 

The analyst notes that scale opportunities exist for CASY, allowing the company to make acquisitions of existing operators, implement the CASY food program, and provide returns across the footprint.

New product innovations such as BBQ Brisket Pizza, Ultimate Beer Cheese Breakfast Pizza, and Thin Crust Pizza continue to drive the business. 

On the flip side, the analyst's FY25 estimate assumes a slightly lower fuel margin of $0.37 with an inside store margin of over 42%.

In terms of sensitivity, a 50 basis point change in fuel margins impacts FY25E by approximately $0.25.

Price Action: CASY shares are trading lower by 1.27% to $268.43 on the last checked Thursday.

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