Needham reiterates Buy rating on Karooooo stock ahead of expected Q2 beat

Investing.com - Needham maintained its Buy rating and $60.00 price target on Karooooo Ltd. (NASDAQ:KARO) ahead of the company’s upcoming second-quarter earnings report. The target represents potential upside from the current stock price of $51.50, with analyst targets ranging from $55.80 to $68.85.

The firm expects Karooooo to deliver a modest second-quarter beat, driven by both subscription growth and average revenue per user (ARPU) outperformance. With a healthy gross margin of 69.9% and revenue growth of 11%, Karooooo operates on a fiscal year ending in February, making this report cover the June-August period. InvestingPro analysis shows the company maintains a GOOD financial health score, with additional insights available in the comprehensive Pro Research Report.

Needham believes Karooooo continues investing in Asia-Pacific territories to support its four-year target of 19% compound annual growth rate (CAGR) for Cartrack subscriptions.

The research firm notes that while Cartrack Tag and Video services have seen less adoption than anticipated, potentially limiting ARPU upside, unit growth should remain strong for the company.

Needham maintains a positive outlook on Karooooo shares entering the earnings report, expecting the Q2 results to serve as a positive catalyst due to the company’s sales and support execution.

In other recent news, Karooooo Ltd. reported strong financial results for the first quarter of 2025, showcasing notable year-over-year growth in both revenue and earnings per share. The company is focusing on expanding its presence in Southeast Asia and enhancing its product offerings, which it believes will drive future growth. In addition to its financial performance, Karooooo has attracted attention from analysts. UBS initiated coverage on the company with a Buy rating, setting a price target of $60.00, citing the company’s growth potential and current trading discount compared to peers. Similarly, Freedom Broker also began coverage with a Buy rating and a price target of $68.00, highlighting Karooooo’s vertically integrated SaaS platform and global expansion as key strengths. These recent developments suggest a positive outlook from analysts regarding Karooooo’s strategic direction and market position.

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