Last Update 22 Dec 25

CPRT: Digital Auctions Will Offset Insurance Headwinds And Support Future Upside

Analysts have modestly trimmed their average price target on Copart, with some lowering expectations to around $52 from $55, while others nudged targets up to about $33 from $32. This reflects ongoing insurance headwinds and concerns about potential share loss, despite a still constructive view on digital auction growth.

Analyst Commentary

Recent research updates present a mixed but nuanced view of Copart, with modest target changes reflecting both confidence in the business model and caution around execution risks.

Bullish Takeaways

Bullish analysts continue to highlight Copart's digital auction platform as a structural growth driver, supporting an Outperform stance even as near term insurance pressures weigh on results.
Incremental price target increases, though modest, signal that some see recent performance and fiscal Q1 execution as better than previously modeled, particularly on revenue resiliency.
Over the longer term, the shift from physical to digital auctions is viewed as a favorable industry trend that can support multiple expansion if Copart maintains or grows its share in key markets.
Valuation is seen as reasonable relative to Copart's cash generation and growth profile, with upside potential if insurance volumes normalize faster than expected.

Bearish Takeaways

Bearish analysts emphasize ongoing insurance headwinds and elevated uninsured rates, which are pressuring volumes and limiting near term visibility on top line growth.
Concerns around "market share evolution" and potential share loss in key geographies lead some to maintain Underweight views and constrain valuation multiples.
Initiation and reiteration of cautious ratings at relatively low price targets reflect skepticism that Copart can fully offset weaker insurance flows with other demand drivers in the near term.
Sector level mixed fundamentals in auto related names, including exposure to cyclical and policy driven swings in insurance activity, are cited as additional reasons to stay conservative on Copart's risk reward profile.

What's in the News

Copart and One Inc. announced a collaboration integrating ClaimsPay with Copart's Title Express and Loan Payoff system to digitize lienholder payments for total loss vehicle claims, with the goal of speeding title clearing and reducing operational costs for insurers (Key Developments).
The new integration enables carriers to initiate payments directly through their core systems or Copart's platform, with real time updates and VIN based matching to improve accuracy and reduce manual errors in claims processing (Key Developments).
Recent buyback tranche updates show Copart repurchased 0 shares between May 1 and July 31, 2025, and 0 shares between August 1 and October 31, 2025, while confirming completion of a long running program totaling about 458 million shares, or 33.27% of shares, for $1.38 billion under the 2003 authorization (Key Developments).

Valuation Changes

Fair Value estimate is unchanged at approximately $48.89 per share, indicating no material shift in intrinsic value assumptions.
Discount Rate has edged down slightly from about 6.96% to 6.96%, implying a marginally lower required return in the updated model.
Revenue Growth assumption is effectively flat, holding near 7.51% annually with only a de minimis numerical adjustment.
Net Profit Margin forecast remains essentially unchanged at about 33.24%, suggesting stable long term profitability expectations.
Future P/E multiple has fallen slightly from roughly 30.52x to 30.27x, reflecting a modestly more conservative valuation on forward earnings.

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.What are the underlying business or industry changes driving this perspective?

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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