Guggenheim starts Mister Car Wash at Buy, constructive on car wash industry

As previously reported, Guggenheim analyst John Heinbockel initiated coverage of Mister Car Wash with a Buy rating and $11 price target. The firm is initiating coverage of the car wash industry with a constructive secular view, given its belief that accelerated “greenfield” expansion of the superior “conveyorized” format will create significant incremental demand and that capital intensity and required local market density will drive consolidation. The firm, which forecasts 3-4% total car wash consumption gains through 2030, with conveyorized operators growing at a faster 4-6% rate, thinks “industry leader” Mister Car Wash, with 6% market share and 30% EBITDA margin and a likely 10-12% top- and bottom-line algorithm is “undervalued.”