Freedom Broker cuts Copart stock price target on margin pressure

Freedom Broker downgraded Copart's stock price target to $36 from $39, citing margin pressure stemming from higher facility and vehicle procurement costs. Analyst Dmitriy Pozdnyakov maintained a Buy rating, noting mixed fiscal 2026 results: revenue grew 2.4% year-over-year to $1.152 billion, while operating profitability was impacted by elevated costs.

Gross margins declined to around 42%, although the company's gross profit margin remained strong at 49% over the past year. Net income dropped 17.4% year-over-year to $327.4 million. Despite these challenges, Copart demonstrated robust cash flow generation and a solid balance sheet, boasting a current ratio of 7.91 and minimal debt.

The stock has declined 11% in the past week. Copart's acquisition of ACV Auctions for $1.9 billion, at a 45% premium, supports its digital marketplace expansion. The analyst's $36 target is based on a discounted cash flow valuation considering free cash flow through 2030.