Last Update 24 Nov 25
Fair value Decreased 10%CPRT: Digital Marketplace Shift And Share Repurchase Will Drive Future Upside
Copart's analyst price target has been revised downward from approximately $56 to $50.22 per share, as analysts cite insurance headwinds and moderating growth assumptions that are impacting the updated outlook.
Analyst Commentary
Recent Street research presents a mix of optimism and caution from analysts evaluating Copart’s prospects. Views reflect evolving insurance industry trends, competitive positioning, and expectations for near-term growth.
Bullish Takeaways- Some bullish analysts remain confident in Copart’s ability to deliver strong shareholder returns, supported by the company’s scale and resilience in digital auction marketplaces.
- Model updates following quarterly earnings show continued confidence in Copart’s earnings potential, with some raising long-term EPS forecasts despite short-term headwinds.
- The transition from physical to digital auctions is viewed as a secular growth driver and is anticipated to enhance the company’s market share as the industry evolves.
- Bearish analysts cite persistent insurance market challenges, which are weighing on volume growth and leading to more moderate revenue expectations.
- There is concern about market share pressures, with higher uninsured rates and ongoing "market share evolution" suggesting potential for Copart to lose ground to competitors.
- Lower valuation multiples are being applied due to sector headwinds, resulting in reduced price targets from several analysts to reflect the softer near-term outlook.
- Some research assigns Copart an Underweight rating based on risks of share loss and uncertain execution in a changing sector environment.
What's in the News
- Copart and One Inc. have entered a collaboration to digitize and streamline lienholder payments for total loss vehicle claims by integrating One Inc.'s ClaimsPay platform with Copart's Title Express and Loan Payoff systems (Key Developments).
- This initiative aims to deliver faster and more accurate payments to lienholders and improve the claims experience for insurers and their customers, directly addressing inefficiencies of traditional paper-based processes (Key Developments).
- The integrated digital process allows carriers to initiate payments within their core systems or Copart's platform, with benefits such as real-time updates, VIN-based matching, and a reduction in manual touchpoints and errors (Key Developments).
- Copart completed a large share repurchase program, having bought back over 458 million shares since 2003, which represents more than 33% of its outstanding shares (Key Developments).
Valuation Changes
- Consensus Analyst Price Target has decreased from $56 to $50.22 per share, reflecting a more cautious outlook.
- Discount Rate remains essentially unchanged, adjusting only slightly from 6.96% to 6.96%.
- Revenue Growth expectations have been revised downward, from 7.88% to 7.51% annually.
- Net Profit Margin is projected to be lower, moving from 35.18% to 33.24%.
- Future P/E multiple estimates have decreased moderately from 32.72x to 31.32x.
Key Takeaways
- International expansion, digital innovation, and rising demand for sustainable vehicle recycling are strengthening Copart's market position and opening new higher-margin revenue opportunities.
- Growth in value-added services and increasing vehicle complexity are driving higher ancillary revenues, operational efficiencies, and enhanced profitability.
- Technological advances, insurance trends, rising costs, growing competition, and reliance on insurers all threaten Copart's auction volumes, pricing power, and overall profitability.
Catalysts
About Copart- Provides online auctions and vehicle remarketing services in the United States, Canada, the United Kingdom, Brazil, the Republic of Ireland, Germany, Finland, the United Arab Emirates, Oman, Bahrain, and Spain.
- Copart is positioned to benefit from the ongoing global growth in vehicle ownership-particularly in emerging markets and via international expansion-driving higher long-term unit volumes and revenue growth potential.
- Accelerating digital adoption in vehicle auctions and heavy investment in proprietary, AI-enabled platforms are expected to enhance Copart's competitive advantage in transaction efficiency, supporting higher net margins and greater buyer/seller engagement.
- Rising demand for sustainable vehicle recycling and parts reuse, as well as Copart's growing role in the automotive circular economy, is likely to increase salvage recovery rates and open up new, higher-margin revenue streams.
- Increasing vehicle complexity and repair costs (from advanced safety and electrification features) are driving higher total loss frequency, expanding Copart's addressable inventory pool and supporting higher average selling prices, benefiting both revenue and operating income.
- Expanding value-added services-such as title processing, transportation, and loan payoff support-are increasing ancillary revenues and improving EBITDA margins, underpinning the company's ability to grow earnings ahead of core unit volumes.
Copart Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Copart's revenue will grow by 11.1% annually over the next 3 years.
- Analysts assume that profit margins will increase from 33.4% today to 33.7% in 3 years time.
- Analysts expect earnings to reach $2.1 billion (and earnings per share of $2.18) by about September 2028, up from $1.6 billion today. The analysts are largely in agreement about this estimate.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 31.5x on those 2028 earnings, up from 29.9x today. This future PE is greater than the current PE for the US Commercial Services industry at 25.7x.
- Analysts expect the number of shares outstanding to grow by 0.4% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 6.83%, as per the Simply Wall St company report.
Copart Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Declining accident frequency due to ongoing improvements in vehicle safety technologies (such as anti-lock brakes, ADAS, and eventual autonomous vehicles), reducing the long-term pool of vehicles available for salvage auction, which may dampen Copart's future auction volumes and revenue growth.
- A structural increase in underinsurance and drivers foregoing insurance coverage, particularly in response to rising insurance premiums, could cause more damaged vehicles to bypass the insurance total loss funnel and Copart auctions altogether, impacting future unit assignments and fee-based revenue.
- Rising operational and facility-related costs, including expanding operational capacity and technology investments, may pressure net margins if volume or revenue growth slows due to any of the above headwinds or from a shift in insurance or noninsurance partner behavior.
- Increased competition from alternative channels (repair shops, new digital auction platforms, insurance carriers or manufacturers pursuing direct disposal), as well as possible repair technology advances decreasing total loss frequency, may compress Copart's market share, pricing power, and ultimately revenue and earnings.
- Heavy dependence on large insurance industry relationships, with any margin pressures, consolidation, or competitive shifts in the insurance sector empowering insurers to negotiate lower fees or shift more claims toward repair instead of salvage, posing a long-term risk to Copart's earnings and net margins.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $56.625 for Copart based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $65.0, and the most bearish reporting a price target of just $46.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $6.4 billion, earnings will come to $2.1 billion, and it would be trading on a PE ratio of 31.5x, assuming you use a discount rate of 6.8%.
- Given the current share price of $48.07, the analyst price target of $56.62 is 15.1% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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