On Friday, Piper Sandler adjusted its outlook on Driven Brands Holdings Inc. (NASDAQ: DRVN), raising the price target to $17.00 from $14.00 while reiterating an Overweight rating on the stock.
The revision follows the company's second-quarter earnings report, which indicated a slight shortfall in sales but a notable increase in EBITDA and EPS.
Driven Brands, known for its automotive services, experienced softer sales due to factors such as reduced spending by lower-income groups, adverse weather impacting its car wash segment, and a slowdown in collision services, noted an analyst from Piper Sandler.
Despite these challenges, the company has seen commercial sales continue to grow steadily.
Analysts noted that while Driven Brands' car wash and glass segments have been underperforming for the past year, there have been signs of improvement in both comparable sales and margin trends recently.
The company's shares have caused frustration among investors, but current trends suggest a positive shift in performance.
The upgraded price target of $17 is based on a maintained multiple assumption of 15 times the projected earnings per share (EPS) for the year 2025.
The company's guidance for the second half of the year is seen as cautious yet likely to be surpassed, and the stock's valuation is considered relatively attractive at current levels, the analyst noted.
InvestingPro Insights
InvestingPro data paints a nuanced picture of Driven Brands Holdings Inc. (NASDAQ: DRVN) as the company navigates a challenging market. With a market capitalization of $2.38 billion, the company's financial health and growth prospects are key to understanding its potential. Notably, Driven Brands has reported a revenue growth of 4.18% in the last twelve months as of Q2 2024, reflecting a steady upward trajectory despite market headwinds. The company's gross profit margin stands at a robust 41.13%, indicating effective cost management and a strong pricing strategy.
Investors considering Driven Brands' stock should note the recent positive price momentum, with a 1-month total return of 10.51% and a 3-month total return of 24.12%. This suggests increasing investor confidence in the company's prospects. However, the stock is trading at 89.07% of its 52-week high, which may indicate room for growth if the company continues on its current trajectory.
For those looking for deeper insights, InvestingPro offers additional tips that could provide a more comprehensive investment strategy. Currently, there are 15 more InvestingPro Tips available that delve into various aspects of Driven Brands' financial performance and stock valuation. These tips can be particularly valuable for investors seeking to make informed decisions based on the latest data and analysis.
As Driven Brands appoints a new CFO and receives an updated price target from analysts, keeping an eye on real-time metrics and expert tips from InvestingPro could offer a strategic advantage in evaluating the company's stock.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.