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Investing.com - JPMorgan upgraded Driven Brands (NASDAQ:DRVN) from Neutral to Overweight on Wednesday, raising its price target to $23.00 from $17.00. The stock, currently trading at $17.33, has shown strong momentum with a 29% return over the past year. According to InvestingPro analysis, the company appears undervalued based on its Fair Value estimates.
The upgrade is based on three key factors: defensive demand amid increasing macroeconomic uncertainty as tariffs affect consumer spending in the second half of the year, continued strength and market share gains in the company’s Take 5 business, and attractive valuation metrics. The company, with a market capitalization of $2.85 billion, maintains a healthy gross profit margin of 42% and has demonstrated steady revenue growth of 6.8% in the last twelve months.
JPMorgan believes Driven Brands provided prudent guidance considering potential tariff impacts, noting that its more defensive demand profile following the US Car Wash divestiture offers better visibility compared to other retail segments. With a beta of 1.09, the stock shows moderate market sensitivity. Discover more detailed insights and exclusive ProTips with a InvestingPro subscription, including access to comprehensive Pro Research Reports covering 1,400+ top stocks.
The investment bank’s research indicates the quick lube category should outperform broader maintenance demand, with Take 5 positioned to continue gaining market share within this segment.
On the valuation front, JPMorgan points out that Driven Brands is trading at 10x EV/EBITDA on 2025 estimates and 9x for 2026, with the company expected to reduce its debt by approximately another 1x by the end of 2026, creating potential for further stock appreciation.
In other recent news, Driven Brands has seen several noteworthy developments. The company reported the outcomes of its annual stockholders meeting, confirming the re-election of three Class II directors and the approval of both executive compensation and the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the fiscal year ending December 27, 2025. On the financial front, Canaccord Genuity raised its price target for Driven Brands to $24.00, citing improved consumer trends in oil change services. Similarly, BofA Securities increased its price target to $23.00, highlighting the company’s minimal exposure to tariffs and potential benefits from an older vehicle fleet requiring more repairs.
Goldman Sachs assumed coverage of Driven Brands with a Neutral rating and set a price target of $20.00, following the company’s divestiture of its U.S. car wash business. Analysts from Goldman Sachs noted that the divestiture has simplified the company’s operations, although they did not see a clear catalyst for a re-rating of the stock in the near term. These recent developments indicate a period of strategic adjustments and financial assessments for Driven Brands.
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