July 30 (Reuters) - ** Analysts at Morningstar believe the market's reaction to Viva Energy’s (VEA.AX) quarterly update has been "too negative," overlooking key drivers of change at the fuel retailer

** VEA shares plunged 11% to A$1.94 on Tuesday after co posted lower H1 convenience sales on poor performance in the tobacco segment

** Morningstar says VEA shares are undervalued at around A$2 each

** The brokerage stronger medium-term sales growth and margins as a central part of VEA’s turnaround strategy, including the ongoing conversion of Viva Express stores to the On the Run format

** Lowers FY25 EPS forecast for VEA to A$0.12 as better-than-expected performance from the retail and wholesale segment was offset by weaker refining results** VEA closed 6.4% lower at A$2.05 on Tuesday** Stock down 22.1% YTD

($1 = 1.5356 Australian dollars)

(Reporting by Keshav Singh Chundawat in Bengaluru)

((Keshav.SinghChundawat@thomsonreuters.com;))