Oppenheimer has moved Monro Muffler Brake Inc. (NASDAQ: MNRO) up a notch, upgrading the aftermarket tire and service chain from Perform to Outperform and setting a $40.00 price target. That target represents a substantial premium to the most recently cited trading level of $22.50.
The upgrade reflects the research firm's view that Monro - which operates roughly 1,100 service centers, mainly across the eastern United States - can begin to show steadier results under new senior leadership after a period of uneven performance. Oppenheimer noted that company dynamics appear to be solidifying and said it expects sales to strengthen and operating leverage to improve as sector conditions become more favorable.
Analysts tracked by InvestingPro project Monro will return to profitability this fiscal year, with an EPS forecast of $0.58, despite the company not having been profitable over the last twelve months. InvestingPro's Fair Value assessment, the research notes, indicates Monro appears fairly valued at current levels.
Monro also presents an income profile for shareholders, carrying a sizable dividend yield of 5.25% and a record of 21 consecutive years of dividend payments. These attributes sit alongside the operational and market uncertainties that have weighed on the company's recent performance.
Oppenheimer characterized Monro as having "largely fallen below the radar" for many smaller-cap consumer stock investors based on conversations with clients, a comment the firm used to explain part of its rationale for raising the recommendation.
The stock's recent market action partly reflects renewed investor interest. Monro shares returned 8.11% over the last week and have climbed 43.76% over the past six months, figures that show notable short-term and multi-month appreciation.
In separate company reporting, Monro released third-quarter results for fiscal year 2026 that combined a modest earnings surprise with a revenue shortfall. The company reported EPS of $0.16, topping the consensus projection of $0.13. Revenue for the quarter came in at $293.4 million, narrowly below the $295.2 million analysts had expected.
Despite the EPS beat, Monro's shares fell in pre-market trading following the release, a move the reporting attributed to the revenue miss and analysts' higher top-line expectations. On the close following that session, the company's shares were reported at $18.99, down from a prior trading price of $20.03.
These developments illustrate a mixed financial picture: an improving bottom-line metric for the quarter set against a slight top-line shortfall and ongoing operational challenges. Investors and analysts now face the task of weighing the potential upside Oppenheimer identifies - including better sales and operating leverage under new leadership - against the recent uneven performance and competitive and macro pressures that previously compounded internal issues.
Summary
Oppenheimer upgraded Monro to Outperform with a $40.00 target, citing signs of stabilizing operations under new leadership and an expectation of improved sales and operating leverage. The company reported Q3 FY2026 EPS of $0.16 versus a $0.13 forecast while missing revenue expectations by a small margin. Monro operates about 1,100 service centers, pays a 5.25% dividend yield, and has paid dividends for 21 consecutive years.
Key points
- Oppenheimer upgraded MNRO to Outperform and set a $40.00 price target - significant upside from the referenced $22.50 level.
- InvestingPro data show analysts expect Monro to be profitable this fiscal year with EPS of $0.58, after a twelve-month stretch without profitability.
- Monro reported Q3 FY2026 EPS of $0.16 (vs. $0.13 forecast) but missed revenue at $293.4 million (vs. $295.2 million), and shares moved lower in pre-market trading.
Risks and uncertainties
- Macroeconomic and competitive pressures in the eastern U.S. market have previously compounded internal shortcomings, creating uncertainty about near-term operational recovery.
- The recent quarter showed mixed results - an EPS beat but a revenue miss - which may continue to influence investor sentiment and share price volatility.