Goldman Sachs analyst Kate McShane downgraded Mister Car Wash to Sell from Neutral with a price target of $10, down from $12, implying 16% downside. The analyst sees the discretionary nature of car wash demand as less defensive in the near term, and she notes its “relatively high leverage” is less attractive in the current environment. Although the churn rate for Unlimited Wash Club members improved during Q1, members are billed on a monthly basis and are able to cancel their membership at any time, McShane tells investors in a research note. Given the inflationary pressures that consumers are facing, Mister Car Wash members could opt to cancel their memberships in favor of less frequent retail washes or otherwise opt to wash their vehicles at home, says the analyst.
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