JPMorgan sees shares of this 10-minute oil change company rallying 30%

JPMorgan upgraded Driven Brands (DRVN) to Overweight from Neutral, raising its price target to $23, implying 33% upside from its Tuesday close, citing better-than-expected second-quarter results and the strong performance of its Take 5 quick oil change segment. Analysts anticipate Take 5 will continue to gain market share and drive growth, viewing DRVN as a defensive stock with limited tariff exposure and clearer visibility into the second half of 2025, despite the company reiterating its full-year outlook.

Analysis

JPMorgan has upgraded Driven Brands (DRVN) to Overweight from Neutral, increasing its price target to $23 from $17, which represents a potential 33% upside from its $17.33 close. The upgrade is primarily driven by the robust performance of the company's Take 5 oil change segment, which is expected to continue gaining market share and outpace broader auto maintenance demand. Despite reporting better-than-expected second-quarter results, the stock traded lower, likely due to management's decision to only reiterate its full-year outlook rather than raising it. This conservative guidance is viewed by the analyst as a prudent measure amid macroeconomic uncertainty. The stock is positioned as a defensive investment, benefiting from limited direct exposure to tariffs and superior visibility into the second half of 2025 compared to other retail names. Management anticipates a moderation in comparable sales growth in the latter half of the year as the company grows off a larger base, a factor viewed positively by the analyst.

Key Decisions for Investors

• Investors could consider the JPMorgan upgrade and 33% implied upside as a bullish catalyst, supported by the strong fundamental growth driver in the Take 5 brand.
• Given the market's negative reaction to the reiterated guidance, it is critical to monitor the company's performance against its full-year targets and any commentary on the potential impact of tariffs on consumer wallets.
• For portfolios seeking defensive characteristics, DRVN's limited tariff exposure and clearer forward visibility may be attractive, though expectations should be tempered by the company's own forecast of moderating comparable sales growth in the second half of the year.