Casey's General Stores (CASY) Q1 results were not enough to overcome peak fuel margin concerns, with industry profitability facing a sharper-than-expected return to normalization, UBS said in a note emailed Thursday.

The bank said Casey's August fuel margin fell to the low 40-cent range per gallon after posting a stronger quarterly fuel margin, a pullback UBS said reinforces investor concerns that the best days for fuel profitability may be behind the industry, with difficult comparisons ahead next year.

UBS also pointed to softness in the company's Grocery & General Merchandise category, saying years of vendor price increases on center-store snacks have made affordability more difficult for consumers already stretched by elevated gasoline prices.

The bank said an accounting reclassification of distribution costs flattered the Prepared Foods & Dispensed Beverages segment's margin, likely reversing some of the initial positive sentiment around that category's margin performance.

UBS maintained its neutral rating but lowered its price target on Casey's to $720 from $925.

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