Canaccord Genuity Reiterates Buy Rating on Driven Brands (DRVN)

Canaccord Genuity analyst Brian McNamara reiterated a Buy rating and $24.00 price target on Driven Brands (NASDAQ: DRVN).

The analyst commented: "Over the last week, we surveyed 50 oil change locations, including 40 Take 5 locations and 10 Valvoline. Like in June, our survey sought to assess (1) recent business trends, (2) cars serviced per day, (3) promotional activity, and (4) if consumers were deferring oil changes given a weakening macro backdrop. We also recap findings from our inaugural set of collision checks in August, surveying 25 geographically diverse collision repair shops, including 13 Caliber Collision and 12 CARSTAR (DRVN) locations, to assess the magnitude of recent industry softness. This time around, we found that oil change promotional activity remains stable, while cars serviced per day was in line with June and last September, as this needs based business continues to prove resilient. Traffic appears flat to up modestly, with ticket likely continuing to drive comps. In addition, 82% of locations have not seen customers defer oil changes given the economy, an improvement from the 80% observed in June. For collision, we view the timing of Caliber’s potential IPO given the wider industry softness implies either the company gaining material share and/ or we’re nearing an industry inflection point. In all, we believe prior struggles in the company’s capital-intensive businesses, such as Car Wash, have overshadowed strength in DRVN’s asset-light, franchised Maintenance business — particularly Take 5 Oil Change — which generates superior cash flows. We believe the multiple can materially expand with U.S. Car Wash now divested and as investor confidence returns. We modestly adjust our estimates and reiterate our BUY rating and $24 PT."

For an analyst ratings summary and ratings history on Driven Brands click here. For more ratings news on Driven Brands click here.

Shares of Driven Brands closed at $17.07 yesterday.

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