11:29 AM EDT, 08/07/2025 (MT Newswires) -- Valvoline's ( VVV ) comparables are expected to accelerate from Q2 through Q4 of fiscal 2026, backed by both transaction and ticket growth, after seemingly reaching its lowest level in Q3 of fiscal 2025 in several years, Morgan Stanley said in a note emailed Thursday.

Morgan Stanley analysts said the automotive services provider's comps in Q3 of fiscal 2025 reached a "trough" at 4.9% and the company's guidance implies a 5.9% growth at the midpoint for Q4. First quarter of fiscal 2026, however, "faces the most challenging year-over-year compare" as the company laps 8% comps in the year-ago period, the analysts added.

The setup for fiscal 2026 appears interesting as selling, general and administrative leverage should return given the company laps an investment year in 2025, and accelerating top-line growth enables higher fixed cost leverage, according to the note.

"...Holding the 2-year stack relatively steady implies Q2 through Q4 of fiscal 2026 comps can reach the mid-to-high 6% level," Morgan Stanley analysts said.

Potential tariff-related inflation presents more risk to the upside than downside. Demand destruction in the form of trade-down could be worse than anticipated, analysts wrote.

Morgan Stanley said it reiterated its equalweight rating on the stock and raised its price target to $41 per share from $39.

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