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On Wednesday, Raymond James maintained its Strong Buy rating on shares of Boyd Group Services Inc (BYD (SZ:002594):CN) (OTC: BYDGF), while reducing the price target to C$325 from the previous C$350. The adjustment reflects recent industry observations and discussions with major operators in the sector, which indicated a slower-than-expected recovery in the collision repair market extending into the third quarter of 2024.
The analyst from Raymond James noted that despite some positive indicators in July, the overall repair activity for that month did not show significant improvement compared to June.
The collision repair demand continues to be affected by several factors: a reduction in the industry backlog following a mild winter, an increase in total loss frequency due to declining used car values, and customers opting for higher deductibles to offset the rising costs of insurance inflation.
Moreover, the recent cyber-attack on CDK Global (NASDAQ:CDK), a software vendor, is anticipated to have a short-term impact on the company's performance. As a result, Raymond James has revised its estimates for Boyd Group Services accordingly.
Despite these challenges, Raymond James reaffirms its Strong Buy rating for Boyd Group Services. The firm's decision is based on the company's consistent long-term performance, its effective growth strategy, solid long-term industry fundamentals, and an increasingly attractive valuation, now standing at 9.7 times the forecasted EBITDA for two years ahead.
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