Driven Brands Buy Rating Reaffirmed on Strategic Divestiture and Deleveraging Upside

In a report released yesterday, Marvin Fong from BTIG maintained a Buy rating on Driven Brands Holdings, with a price target of $21.00.

Marvin Fong has given his Buy rating due to a combination of factors tied to Driven Brands’ strategic portfolio reshaping and balance sheet improvement. He views the sale of the IMO international car wash business, which will be treated as discontinued operations starting with the fourth quarter of 2025, as a constructive step that simplifies the company’s profile and allows management to focus on its three remaining segments, for which his estimates remain unchanged. While the divestiture leads to lower reported revenue, EBITDA, and EPS guidance for fiscal 2025, he considers these reductions a mechanical consequence of removing the IMO contribution rather than a deterioration in the underlying core business.

Fong also highlights that the expected €406 million in proceeds from the IMO sale will be used to reduce debt and for general corporate purposes, which should strengthen the balance sheet and trim net leverage by about 0.3x. He acknowledges the company’s updated same-store sales outlook, now modestly below the former 1%–3% range and modeled at 0.9% for 2025, but appears comfortable that the core operations remain intact after the transaction. Finally, his $21 price target is derived from a sum-of-the-parts valuation that already incorporates a 15% complexity discount, suggesting meaningful upside from current levels and supporting his continued Buy recommendation.

Fong covers the Consumer Cyclical sector, focusing on stocks such as Carvana Co, Mercadolibre, and Driven Brands Holdings. According to TipRanks, Fong has an average return of 3.1% and a 45.25% success rate on recommended stocks.