Market players hit the gas pedal on auto marketplace operator Copart (CPRT +4.42%) on Thursday, following an analyst recommendation upgrade. With that fuel injection into the shares, they zoomed more than 4% higher that trading session. That was in sharp contrast to the benchmark S&P 500 index, which dipped by 0.7%.
Shifting to a higher gear
The person behind the upgrade was Jash Patwa of JPMorgan Chase's J.P. Morgan. Well before market open Thursday, he moved his Copart recommendation up one peg to overweight (read: buy) from neutral. He accompanied this with a significant price target raise, to $40 per share from $32.
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According to reports, Patwa waxed bullish about the early tenure of returning CEO Jay Adair, writing that Copart appears to be picking up share in some states from an insurer he did not name.
While acknowledging that Copart's business as a salvage market specialist is difficult and competitive, he ticked off several advantages the company could harness. He feels that it betters competitors in terms of service levels and long-standing relationships with key insurers, among other factors.
NASDAQ: CPRT
Key Data Points
Gains from total losses
Adair served as CEO from 2010 to 2024 (although in those last two years, he was co-CEO alongside Jeff Liaw). He's clearly not resting on those laurels, as evidenced by Copart's apparent interest in acquiring car insurance software developer CCC Intelligent Solutions Holdings, according to an article published in mid-August by Bloomberg.
It's still early days for Adair's second stint at the top, but these initial signs are encouraging. Ditto for the dynamic of total loss frequency (i.e., the rate at which insurers declare cars involved in accidents to be total losses), which favors Copart's business. This could be a sleeper stock to watch in the auto industry-adjacent space.
