JPMorgan Raises Driven Brands Rating to Overweight, Boosts Price Target to $23.

JPMorgan has upgraded Driven Brands (DRVN) to Overweight from Neutral and raised the price target to $23 from $17. The decision follows the company's strong quarterly performance and thoughtful forecast for the future. Driven Brands is experiencing market share growth with its Take 5 service and operational transparency from the divestment of its Wash segment. The company operates a comprehensive platform for automotive services, including paint, collision, glass, and repair services, alongside high-frequency services like oil changes and car washes.

JPMorgan has upgraded Driven Brands (DRVN) to Overweight from Neutral, raising the price target to $23 from $17. The decision follows the company's strong quarterly performance and thoughtful forecast for the future. Driven Brands is experiencing market share growth with its Take 5 service and operational transparency from the divestment of its Wash segment. The company operates a comprehensive platform for automotive services, including paint, collision, glass, and repair services, alongside high-frequency services like oil changes and car washes.

According to the latest earnings call, Driven Brands reported an 18th consecutive quarter of same-store sales growth, increasing 1.7% in Q2. System-wide sales grew 3.1% to $1.6 billion for Q2, with total revenue for the quarter at $551 million, an increase of 6.2% year-over-year. Adjusted EBITDA for Q2 was $143.2 million. The Take 5 Oil Change segment reported same-store sales increasing 7% and revenue growth of 14.7%, with adjusted EBITDA for the quarter at $108.2 million [1].

The company's deleveraging plan has also shown progress, with net leverage reduced to 3.9x on a pro forma basis following the sale of the U.S. car wash seller note for $113 million. This has helped in reducing net leverage from 5x to 3.9x since the end of the previous year [1].

Driven Brands reaffirmed its fiscal 2025 outlook, expecting revenue of $2.05 billion to $2.15 billion, adjusted EBITDA of $520 million to $550 million, and adjusted diluted EPS from continuing operations of $1.15 to $1.25. The company expects the second half of the year to represent approximately 50% of full-year revenue and adjusted EBITDA, with a more tempered third quarter weighting due to timing and nature of headwinds [1].

Management highlighted continued softness in the Maaco and collision segments, with Rivera noting "we anticipate ongoing softness in both for the remainder of the year." Weather-related risks in the Car Wash segment were also noted, particularly unsettled conditions in July that could affect the back half [1].

Analysts' tone was neutral to slightly cautious, focusing on the sustainability of growth in Take 5, potential moderation in Car Wash results, and ongoing challenges in Franchise segments. Management maintained a confident tone in prepared remarks but became slightly more cautious when discussing Maaco and collision softness, and the outlook for the second half [1].

JPMorgan's upgrade reflects confidence in Driven Brands' operational model and ability to achieve long-term value creation for shareholders. The company's focus on Take 5 growth, franchise cash generation, and deleveraging strategy continues to be a key driver of its success [1].

References:
[1] https://seekingalpha.com/news/4478936-driven-brands-outlines-2_05b-2_15b-revenue-target-for-2025-while-advancing-take-5-and
[2] https://www.morningstar.com/news/business-wire/20250805659164/driven-brands-holdings-inc-reports-second-quarter-2025-results