Stephens Upgraded "Compelling" Copart

Stephens analyst John Lawrence upgraded Copart CPRT from Equal-Weight to Overweight and raised the price target from $34 to $40 following earnings report. Copart reported 1Q14 earnings of $0.32 versus Stephens' estimate of $0.35 and consensus of $0.34. Revenue grew 17.2% to $279.9 million beating Stephens' estimate of $267 million and consensus of $272.6 million. SG&A expense margin was up 230 bps, beating the analyst's expectation of a 100 bps increase. Stephens commented that Copart is a "compelling" investment. The analyst noted that organic unit volumes in the quarter were stronger than expected and that the business is in a better position today than one year ago. Lawrence emphasized the gain in market share by North America and the newly established beach-head operations internationally within the past year. Stephens updated FY14 estimates to reflect the lower-than-expected results in the first quarter from $1.68 to $1.61. Copart closed at $34.43 on Friday.