On Monday, Canaccord Genuity (TSX:CF) maintained a Buy rating on Driven Brands (NASDAQ: DRVN) and increased the price target to $21 from $20. The automotive service company's fourth-quarter results, reported last month, indicated that while the Car Wash segment continued to underperform, the management has completed the integration of Auto Glass Now, setting the stage for potential growth in 2024.
The Car Wash segment has faced challenges, and the company has decided not to open new U.S. locations until its base business meets internal performance standards. The completion of the Auto Glass Now integration has been a significant step for Driven Brands, as confirmed by Canaccord Genuity's recent survey of various locations, including competitors and new states such as Alabama, Arkansas, Colorado, Iowa, Louisiana, and Minnesota.
The firm's comprehensive checks, which included the sixth round of an out-of-pocket pricing study comparing Auto Glass Now with Safelite, revealed that the auto glass segment's previous integration issues have been resolved. Additionally, there are signs of modest improvement in the Car Wash segment.
Canaccord Genuity's analysis supports the belief that Driven Brands can turn around these segments and capitalize on future opportunities for market share gains. The raised price target reflects slightly higher estimates based on the company's latest performance and market position.
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