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Investing.com -- Goldman Sachs initiated coverage on U.S. auto service providers taking a cautious stance on the sector amid concerns about market saturation and execution risk, while expressing optimism about select long-term growth stories.

Valvoline (NYSE:VVV) received a Buy rating with a 12-month price target of $45, implying 31% upside. Goldman called the company a “best-in-class operator” in a fragmented, needs-based market and highlighted recent refranchising efforts as underappreciated by investors.

Analysts believe the current valuation is weighed by temporary narrative headwinds and limited tariff exposure and resilient macro positioning support the bullish view.

Driven Brands was initiated at Neutral with a $20 price target.

While Goldman said the company’s recent exit from its U.S. car wash business makes its story cleaner, easier to understand, and higher quality, the firm is waiting for more consistent execution before turning more positive.

A better-than-expected first-quarter result was noted as a step in the right direction, but no clear near-term catalyst was identified.

Mister Car Wash (NYSE:MCW) was started with a Sell rating and a $6.25 price target, reflecting a 7% downside.

Goldman warned that the car wash industry has become saturated after years of rapid expansion and that Mister faces intensifying competition from new, well-capitalized entrants.

Analysts also flagged tougher comparisons in the second half and potential churn from price increases in its subscription service.

Lithia Motors (NYSE:LAD) was also rated Neutral with a $340 target.

Goldman cited uncertainty in near-term demand and a wide range of possible outcomes.

While pent-up vehicle demand could support upside, the firm cautioned that affordability issues and macro pressure remain risks. A severe downside case could see 2025 new vehicle sales fall below 15 million units.

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