Copart, IAA to benefit as back-to-work increases collision probability
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Copart, Inc. (NASDAQ:CPRT) and IAA Inc. (NYSE:IAA) could be idiosyncratic beneficiaries as many employees return to regular commutes.

âAccident rates should increase as more people return to work with historical data indicating that most accidents occur during weekday AM/PM rush hour commutes,â Guggenheim analyst Ali Faghri told clients on Thursday. âTotal loss rates should also rebound as repair costs increase and used car pricing normalizes.â

He added that the adverse impact of normalizing used car pricing on both IAA (IAA) and Copart (CPRT) are overblown and can be offset by fee increases, stronger volumes, and moderating towing costs. As a result, valuations appear still-attractive, especially relative to historical levels. 

âWith both CPRT and IAA trading at meaningful discounts to long-term averages and visibility for accelerating volumes, ongoing elevated RPU, and strong earnings growth in coming years, we believe the risk/reward is extremely compelling for the group,â Faghri concluded.

Faghri reiterated his âBuyâ rating on Copart (CPRT) and upgraded IAA (IAA) from âNeutralâ to âBuyâ with price targets set at $151 and $52, respectively. He added that the story for IAA (IAA) in 2022 isâ de-riskedâ at this point, encouraging his upgrade.
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